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Retail Apparel PricesIncrease in July

Economic pressures fueled the sharpest year-to-year decline in retail prices last month so far in 2009, although apparel prices rose.

WASHINGTON — Retail apparel prices bucked the trend in July, rising for the second straight month, while economic pressures fueled the sharpest year-to-year decline in retail prices so far in 2009, the Labor Department said in its Consumer Price Index.

This story first appeared in the August 17, 2009 issue of WWD.  Subscribe Today.

Retail apparel prices rose a seasonally adjusted 0.6 percent in July and increased 1.1 percent compared with a year earlier. Apparel prices had increased 0.7 percent in June after falling 0.2 percent in May.

Men’s apparel prices declined 1.1 percent in July and fell 0.9 percent in 12-month comparisons. Women’s apparel prices increased 1.1 percent last month and rose 1.9 percent compared with July 2008.

Apparel prices resisted a general downward trend in pricing for consumer goods in recent months, economists said. Early discounting, historically low apparel prices, seasonal factors, shrinking inventory levels and volatile economic factors all impacted the CPI, economists said.

“I’m very surprised,” said Charles McMillion, president and chief economist with MBG Information Services, of the price increases.

With the exception of a spike in transportation costs earlier this summer, apparel prices have risen at a faster annual rate than any other category in the last three months, he said.

“Apparel retailers got away with price increases, which runs counter to everything going on in the rest of the economy,” said Richard Yamarone, director of economic research at Argus Research Corp.

Retail sales results did not show a significant increase in consumer purchases this summer. Economists said the relationship between sales figures and prices bears watching in the coming months.

Prices for all goods and services were flat in July, but fell 2.1 percent compared with a year earlier. The decline was the sharpest year-to-year falloff since at least January 1950, beating the previous record drop in May when prices fell 1.3 percent. The so-called core prices, which exclude the volatile food and energy sectors, increased 0.1 percent in July and rose 1.5 percent compared with a year earlier.

The steep year-over-year decline in consumer prices was driven by lower gas prices, said Nigel Gault, chief U.S. economist at IHS Global Insight. Gas prices hit record highs last summer.

Retail prices for women’s dresses increased 1.2 percent in July and spiked 9.2 percent year-over-year. Women’s suits and separates rose 1.4 percent month-to-month and 0.5 percent in 12-month comparisons. Prices in the broad women’s underwear, nightwear, sportswear and accessories category were up 1 percent in July and 2.9 percent year-to-year. Women’s outerwear prices declined 4.6 percent in July, but rose 0.7 percent compared with a year earlier. Girls’ apparel prices were up 1.7 percent month-to-month and 0.3 percent in 12-month comparisons.

Men’s suits, sport coats and outerwear saw prices fall 2.1 percent in July and 9.1 percent year-to-year. Prices for men’s shirts and sweaters declined 1.2 percent month-to-month, but rose 0.9 percent compared with a year earlier. Men’s pants and shorts prices declined 1.4 percent in July and dropped 0.2 percent year-to-year. Men’s furnishings increased 0.1 percent from the previous month and rose 2.5 percent in 12-month comparisons. Boys’ apparel prices increased 0.5 percent in July and 4 percent from a year earlier.