WASHINGTON — Wholesale prices on domestically produced women’s and girls’ apparel fell 0.1 percent in December compared with the year-ago period, according to the Labor Department’s Producer Price Index.
Prices on all U.S. goods shot up a seasonally adjusted 0.9 percent last month — the biggest boost since a 1.7 percent increase in September — partly because of dramatically higher energy costs. Stripping out the volatile food and energy sectors, the core rate of inflation rose 0.1 percent.
“You’ve got to consider it good news because the core percent is up only 0.1 percent,” said David Wyss, chief economist at Standard & Poor’s. “There’s not much inflation out there, at least outside of energy.”
Wyss said the minimal inflation would likely prompt the Federal Reserve Board to stop raising interest rates. The benchmark federal funds rate is at 4.25 percent and is to be reviewed again this month.
Economic growth should remain steady in 2006, Wyss said.
“One of the things we do expect to get a bit of a boost from is [Hurricane] Katrina repair work, and one of the things we’re a little bit worried about is, that’s happening more slowly than expected,” he said.
In the women’s and girls’ apparel area, December prices of underwear shot up 5.6 percent, and of knit shirts and blouses, 3 percent. Losing ground were nightwear, down 5.7 percent, and jeans and slacks, down 2 percent. However, these prices don’t usually have much impact on retail prices because domestic apparel production constitutes less than 10 percent of all goods sold to consumers.
Prices on all U.S.-produced apparel and textile products rose 1.6 percent. Synthetic fibers picked up 6.3 percent, while yarns were up 2.7 percent and greige fabrics increased 3.5 percent.
“Producers still don’t have much pricing power, but at least they’re not facing the broadly deflationary pressures that they’ve been facing now for about eight years,” said Charles McMillion, president and chief economist at MBG Information Services. “The hope is that they can improve their margins a little bit and plow some new money back into investments.”
This story first appeared in the January 17, 2006 issue of WWD. Subscribe Today.