By  on April 16, 2007

WASHINGTON — Wholesale prices on U.S.-made women's and girls' apparel were flat last month compared with February, but increased 0.8 percent against a year ago.

The Labor Department's Producer Price Index released Friday said the index for women's and girls' apparel was boosted by a 12-month increase of 4 percent for knit shirts, 1.8 percent for woven shirts and 2.5 percent for nightwear. Offsetting these increases were drops in dress prices of 2 percent and in underwear prices of 2.4 percent from a year ago.

Wholesale prices of U.S.-made synthetic fibers slid 1.2 percent last month, as yarn prices rose 1 percent. Greige fabric prices dipped 0.3 percent, and finished fabric sold for 1.7 percent more in March than a year earlier.

Prices for all U.S. goods rose 1 percent in March compared with the preceding month, more than the 0.7 percent economists were expecting. Excluding the volatile food and energy sectors, the so-called "core" prices were flat.

Inflation might have been nonexistent at the core level, but Mark McMullen, senior economist at Moody's, said there was reason for concern over higher costs for some commodities and energy.

"As long as the economy has been growing in recent years, it seems to be that it's been very much able to absorb these higher input costs, particularly the higher energy costs," McMullen said. "Now that things are slowing down, that might not necessarily be the case."

Still, he said the economy would likely continue to grow and prices should stay in check, for the most part.

Increased prices could prompt the Federal Reserve Board to raise interest rates to keep the economy from growing too quickly. The Fed halted a campaign of 17 consecutive rate hikes in June, leaving the benchmark fed funds rate at 5.25 percent.

Bill Rhodes, president of Rhodes Analytics, an investment strategy company, said inflation was a concern, but not a problem yet.

"Think of inflation as if it were friction," Rhodes said. "If you're looking at a mechanical system, the friction is where you lose energy. It's an energy loss out of the economy. That money can't be used. That's wealth that's being lost."

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