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U.S.-Made Apparel Prices Dip in Feb.

Wholesale prices for U.S.-produced women's and girls' apparel fell 0.1 in February, but were up 0.9 percent against a year ago, according to the PPI.

WASHINGTON — Wholesale prices for U.S.-produced women’s and girls’ apparel fell 0.1 in February, but were up 0.9 percent compared with a year ago, according to the Labor Department Producer Price Index released Tuesday.

Producer prices for all apparel were flat in February against January, but increased 0.6 percent versus a year ago.

“Apparel prices are falling or flat despite rising energy costs,” said Charles McMillion, president and chief economist of MBG Information Services. “The reason that producers have very little pricing power is because of increased pressure from underpriced imports, particularly from China, and weakened demand growth.”

McMillion said rising prices for oil and other materials boosted producer prices for synthetic fibers, which rose 0.7 percent in February after going up 0.3 percent in January. By contrast, raw cotton prices were 28.1 percent lower in February than a year earlier and 0.1 percent lower for the month, he said.

Wholesale prices for all finished goods rose 0.4 percent in February, driven by food and energy price increases, and after a 0.3 percent increase in January. Stripping out volatile food and energy prices, the overall core rate in the PPI rose a modest 0.1 percent.

“I expected a larger gain in the overall index,” said Carl Steidtmann, chief economist at Deloitte Research.

“There are some inflation concerns,” he said, noting the year-over-year change in finished goods was up 4.7 percent. “Very clearly, we have seen a pickup in producer price inflation. A lot of that is energy related.”

The PPI, which has been creeping up in the past year, is an early measure of inflation in the economy. The Federal Reserve Board, monitoring signs of inflation, raised the federal funds rate — the interest that banks charge each other — by a quarter point to 2.75 percent.

Stocks and bonds fell on the interest rate news and word from the Fed that inflation had  picked up. The Dow Jones industrial average fell 95 points, or 0.9 percent, to close at 10,471. The Nasdaq dropped 18.17 to close at 1989.

Among the apparel categories showing significant wholesale price changes in the month were shirts and blouses, which fell 0.2 percent in the month and year-over-year, and outerwear and sweaters, which dipped 0.1 percent last month, but were 8.6 percent higher than February 2004. Producer prices for underwear fell 0.2 percent last month and rose 0.5 percent against a year ago, while prices for nightwear were flat in February and were up 0.2 percent year-over-year. Wholesale prices for bras fell 0.1 percent and increased 2.1 percent against a year ago.

This story first appeared in the March 23, 2005 issue of WWD.  Subscribe Today.

In another category tracked by the Labor Department, wholesale prices for apparel made in knitting mills fell 0.4 percent in February but were up 0.5 percent against a year ago. Prices for knit shirts were flat and were up 5.3 percent year-over-year.