Wholesale Apparel Prices Decline in July

Core prices, excluding volatile food and energy, were up 0.4 percent, the largest rise since January.

WASHINGTON — Wholesale prices on domestically produced women’s apparel slid in July, but prices on all finished goods rose, stoking fears consumers might have less money for discretionary purchases such as fashion.

Women’s and girls’ apparel prices fell 0.3 percent during the month, but were 0.5 percent above year-ago levels, according to the Labor Department’s Producer Price Index released Wednesday.

However, prices on all U.S.-produced goods — driven by higher increases in the energy sector — increased a seasonally adjusted 1 percent during July, the largest gain in nine months. Core prices, excluding volatile food and energy, were up 0.4 percent, the largest rise since January.

Higher prices on the wholesale level eventually work their way down to the consumer, who is already contending with increasing gas prices — a gallon of regular sold for an average of $2.56 Wednesday across the country, according to the American Automobile Association.

The cumulative effect could hurt consumer confidence and deter discretionary spending, said John Lonski, team managing director of the Moody’s Investors Service economic group.

“There’s reason to rein in one’s optimism,” Lonski said. “Maybe it’s not a bad idea to scale back those orders a bit.”

Falling real wages in the service sector might also conspire with higher prices to dampen consumer spending, Charles McMillion, president and chief economist at MBG Information Services, said in a report.

“I expect that early reports of poor retail sales in August are just the beginning of a major pullback in spending,” McMillion said. “If gas prices remain at current levels and particularly if the housing boom should weaken, the slowdown in consumer spending could be sharp and painful.”

In the apparel sector, wholesale dress prices fell 1.4 percent for the month and 4.1 percent against a year ago, while prices on knit shirts and blouses were flat in July, but up 3 percent from a year earlier. Women’s and girl’s underwear advanced 0.8 percent at wholesale for the month and 5.6 percent against a year ago.

Wholesale prices for synthetic fibers fell 0.4 percent last month, but were 5 percent more than a year ago. Greige goods prices picked up 0.3 percent and were 1.6 percent above a year ago, while knits gained 0.1 percent for the month, but dipped 1.2 percent from a year earlier.

This story first appeared in the August 18, 2005 issue of WWD.  Subscribe Today.