WASHINGTON — Wholesale prices for U.S.-produced women’s and girls’ apparel bounced back in January, rising 0.6 percent even though the end of global quotas on Jan. 1 had been predicted to depress costs.
Prices for all U.S.-made apparel increased 0.3 percent compared with December. Men’s and boys’ prices inched up 0.1 percent, according to the Labor Department Producer Price Index released Friday.
In the overall economy, producer prices gained 0.3 percent, but core prices, which exclude volatile food and energy prices, rose 0.8 percent — the biggest boost since 1998 — and stoked inflation fears among economists.
U.S.-made textile and apparel prices have been in a long-term decline because of cheaper imports. Economists expect prices to drop further this year because of the elimination of global apparel and textile quotas and the costs associated with them. U.S.-made apparel has shrunk and now represents a small portion of all goods sold at retail.
John Mothersole, senior economist at Global Insight, said the increase in apparel and textile prices last month was temporary.
“I don’t see how in a globally competitive environment, which is what the apparel industry is in today, those increases can persist, unless demand is better than everybody is seeing,” Mothersole said. “I don’t see how the industry escapes the big bang it just went through. We have always assumed that this reordering of world trade will result in the decline in prices of 5 to 10 percent over the course of the next six to eight quarters.”
Mothersole said the “alarming increase” in the core prices in the overall index is “worrisome,” citing increases in capital equipment prices, which went up 0.6 percent in January.
“Part of the good news there is that, even though the number is bad, it seems as if part of the increase is tied to cigarettes and new car prices,” he said, adding they most likely will not continue.
Outerwear and sweaters was the only category of women’s and girls’ apparel cut and sewn in the U.S. showing any price changes in January, rising a substantial 8.7 percent. All other categories were flat.
This story first appeared in the February 22, 2005 issue of WWD. Subscribe Today.
In another category based on apparel made in knitting mills, wholesale prices for knit shirts gained 5.2 percent in January, while prices for underwear, nightwear and sweaters remained unchanged.