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Women’s Retail Apparel Prices Decline 2.7 Percent for March

Retail prices in women's apparel show signs of softening amid a broader inflationary trend...

WASHINGTON — Retail prices in women’s apparel show signs of softening amid a broader inflationary trend, falling a seasonally adjusted 2.7 percent last month, and 4.5 percent compared with a year earlier, the Labor Department reported Wednesday in its Consumer Price Index.

The drop followed a decline of 1.8 percent in February, and retail price increases in women’s apparel in January, December and November. Apparel costs as a whole slid 1.3 percent from February and 1.4 percent from March 2007. Men’s apparel declined 0.2 percent for the month and increased 0.5 percent from last year, while girls’ apparel declined 2.4 percent from February and slid 9.4 percent from March 2007.

Apparel costs defied the overall trend in March, as all other categories saw retail price increases. Costs for all goods and services increased 0.3 percent in the month, after remaining flat in February and rising 0.4 percent in January and December.

The core prices, excluding the volatile energy and food sectors, increased 0.2 percent last month. They were also flat in February and increased 0.3 percent in January. Prior to January, the core costs crept up 0.2 percent each month for nine months straight.

In women’s apparel, outerwear and dresses contributed to the downward price movement, said Jessica Penvose, women’s analyst with the U.S. Bureau of Labor Statistics. Outerwear prices slid 8.5 percent in March and 5.8 percent compared with a year ago. Dresses fell 7.4 percent for the month and 1.4 percent for the year. Suits and separates declined 2 percent in March and 6 percent from a year ago, and the combined category of underwear, nightwear, sportswear and accessories increased 1 percent from February and 2.1 percent from March 2007.

March is normally a month when apparel costs are raised to coincide with the arrival of spring and summer merchandise in stores, but that was not the case this year, Penvose said.

“Prices aren’t going up as much as they have in the past,” Penvose said.

It is possible that apparel has been affected by flagging demand in a weakened economy.

“There is a slowdown going on,” said Kenneth Beauchemin, U.S. economist for Global Insight. “We do expect that the demand for apparel is declining, especially since consumers are taking a hit with food and energy prices. They have less left over for apparel and other things.”

This story first appeared in the April 17, 2008 issue of WWD.  Subscribe Today.

Retailers also could be responding to economic pressures facing consumers, said John Lonski, chief economist at Moody’s Investors Service. The economy and a slackening in the labor market make consumers resistant to price increases, he said.

“It would be more difficult for retailers to increase apparel prices,” Lonski said.

Economic conditions are continuing to weaken across the country, according to the Federal Reserve Board’s Beige Book report, also released on Wednesday.

Anecdotal reports said discretionary spending fell in the majority of the 12 districts tracked in the report since the last survey. Non-auto retailers in 10 districts said their sales were “sluggish or declining.” Demand for luxury goods was strong in Chicago, San Francisco and, to a lesser extent, Philadelphia, according to retailers in those districts.

One retailer in Boston said a recession had probably started for retailers in December, while another said, “It’s just a question of the consumer getting through the next few months.”

Prices in Boston for goods were steady, and modest increases were passed along where possible, according to the report. Retailers in New York said prices were steady, but significant cost increases could be on the horizon.

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