WASHINGTON — Record energy costs in June drove the largest monthly surge in consumer prices in 26 years, but discounting kept women’s apparel prices flat from May and down 3.4 percent compared with a year ago.
This story first appeared in the July 17, 2008 issue of WWD. Subscribe Today.
Overall, apparel prices increased 0.1 percent from the prior month, but fell 0.2 percent against June 2007.
Intensifying the squeeze on consumers who face tighter credit and declining home values, prices for all U.S. consumer goods jumped 1.1 percent in June and 5 percent over the 12 months, the Labor Department reported Wednesday in its Consumer Price Index.
The results were significantly more than forecasts by economists and came amid warnings from Federal Reserve chairman Ben Bernanke about heightened inflation risks.
“The June leap in consumer prices came in uncomfortably higher than the 0.7 percent rate anticipated by the consensus,” said Kenneth Beauchemin, U.S. economist for Global Insight.
Prices in the general index were driven by a 6.6 spike in energy prices. Excluding the volatile food and energy sectors, so-called core prices increased 0.3 percent in thee month and 2.4 percent year-to-year.
Overall, retail prices increased 0.6 percent in May after gaining 0.2 percent in April and 0.3 percent in March.
Apparel prices in June were mostly affected by discounts, said Malinda Harrell, an economist with the U.S. Bureau of Labor Statistics, although markdowns in June to clear out spring and summer merchandise are not unusual.
Retail price changes for individual categories varied. The cost of women’s dresses increased 0.7 percent in June and 0.3 percent versus last year. Women’s outerwear was up 0.8 percent from the previous month, but fell 5.5 percent from the year-ago period.
Prices for suits and separates increased 0.3 percent in June, but fell 4.8 percent in yearly comparison. The combined category of women’s underwear, nightwear, sportswear and accessories saw prices fall 0.6 percent in June and 1.3 percent from the previous year. Girl’s apparel advanced 3 percent in June, but slid 1.5 percent from a year earlier.
The outlook for retail price inflation doesn’t bode well for consumers.
“The June uptick in the core rate provides an early indication that the tidal surge in energy and other commodity costs are trickling through to consumer prices at large,” said Beauchemin, adding that the impact is expected to intensify in the next year.