By  on September 19, 1994

WASHINGTON -- Women's retail apparel prices in August plunged a seasonally adjusted 2.6 percent against July, well below the 0.3 percent increase for all consumer goods and reflecting the continued pressure on retailers to keep prices down.

Compared to August 1993, according to Labor Department figures released last week, retail prices for women's apparel last month were down 3.5 percent, compared to a 2.9 percent increase for the whole Consumer Price Index.

"I don't think there is any doubt that retailers are trying to discount as deeply as they can," a Labor analyst said, noting the ability of larger stores to work better deals with their suppliers as a factor in helping to keep prices lower. Typically, apparel prices in August increase as stores introduce fall and winter apparel.

Last August, women's apparel prices were up 1.5 percent against July.

"It is the larger companies with more clout that can really resist price increases," said Rosalind Wells, senior economist with Management Horizons, the retail consulting division of Price Waterhouse, LLP, New York.

"It's classic economics here," she said. "The women's market is much weaker than men's, which means you can't increase prices."

For all apparel, retail prices in August declined 1.1 percent and were down 0.9 percent since August 1993. Men's apparel prices were up 0.5 percent for the month and increased 0.2 percent over the year. Girls' apparel prices at retail dropped 3.8 percent for the month and were down 2.8 percent over the 12 months. The Labor Department attributed the 1.1 percent monthly decline in all apparel prices as helping to temper the overall CPI, considered the most reliable indicator of inflation.

August is the third consecutive month retail prices have advanced 0.3 percent, indicating to economists that inflation remains moderate.

The report "should spell relief for the Federal Reserve and financial markets who seem to believe that inflation is on the verge of boiling over," said Robert Barr, the U.S. Chamber of Commerce deputy chief economist. "While we've had a slight acceleration in consumer prices in the last few months, this should be countered by the slower economic growth expected in the second half of the year."Within the separate women's apparel categories, prices for coats and jackets for the month were up 0.9 percent and down 2.3 percent since August 1993, as prices for dresses plunged 5 percent in August and were off 4.3 percent from year-ago levels. Prices for separates and sportswear declined 1.2 percent in August and were down 1.4 percent over the year, as prices for suits fell 13.3 percent for the month and were off 18.2 percent from August 1993.

Meanwhile, at the producer end, higher prices for fiber and cotton haven't affected the cost of domestically produced textiles and consequently the price of U.S.-made apparel, according to the August Producer Price Index.

Prices for domestically made women's apparel in August increased a seasonally adjusted 0.4 percent against July, as prices for all finished goods jumped 0.6 percent, their largest increase in almost four years. Compared to August 1993, women's apparel prices at wholesale last month were down 0.2 percent, as producer prices for all finished goods were up 1.9 percent.

The last time there was a bigger monthly jump in wholesale prices for all finished goods occurred in October 1990 when they shot up 1.1 percent.

Wholesale prices for all apparel increased 0.1 percent for the month and were up 0.2 percent from August 1993. Carl Priestland, economist with the American Apparel Manufacturers' Association, said domestically made apparel prices are resisting price increases to remain competitive relative to imports in a market of cautious consumer spending.

Apparel makers, too, aren't seeing prices increase from domestic textile suppliers. That could be changing, however. The textile industry, which buys its raw materials months in advance, may be experiencing the first signs of price increases for these goods, which have seen price hikes over the last year, said Dave Link, economist with the American Textile Manufacturers Institute.

Last month textile prices increased 0.2 percent against July. For several months there has been little movement in the index. Compared to August 1993 the index last month was up 0.1 percent.

"Some of the costs that were occurring in the fiber business last year are now being felt at the fabric end," Link said, noting that prices are still low compared to a year ago.-- Fairchild News Service

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