By  on March 22, 2006

WASHINGTON — Wholesale prices for domestically produced women's and girls' apparel fell 0.4 percent in February compared with the same period last year. Prices on all goods dropped more than economists expected amid declines in the food and energy areas.

Registering its biggest dip since April 2003, the Labor De­partment's Producer Price Index declined a seasonally adjusted 1.4 percent for all finished goods in February. The index had increased 0.3 percent in January and 0.6 percent in December.

"The acute pressures that we saw in terms of prices in the fourth quarter of 2005 have moderated," said Brian Bethune, U.S. economist at Global Insight.

Most of those pressures came from a steep rise in energy prices.

"The core rate, when you exclude food and energy, was up 0.3 percent, but there was nothing in there that looked like it was out of line," he said. "Overall, I would say, on the core side, it looked pretty good."

James F. Smith, director of the Center for Business Fore­casting at the University of North Carolina at Chapel Hill, said the report "says, probably, there's not very much inflation in the pipeline, but you'd be well advised not to draw huge conclusions from the PPI."

Economists prefer to look at the Consumer Price Index, which rose 0.1 percent in February, to gauge inflation. This is particularly true in apparel, since the CPI measures all goods sold at retail, while PPI concerns only U.S.-made clothing, which accounts for only about 10 percent of the pie.

Though consumer prices appear to be in check, Smith still expects the Federal Reserve Board to raise interest rates twice more, to 5 percent. He said that could cool off the economy too much.

Within the women's and girls' area in February, wholesale prices for dresses fell 3.7 percent from a year earlier, while nightwear was down 4.8 percent, and jeans and slacks dropped 2 percent. Prices on knit shirts and blouses rose 2.4 percent.

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