WASHINGTON — The sagging U.S. economy got some deflating news on Tuesday.
Prices for all U.S.-produced goods fell a seasonally adjusted 2.8 percent in October, the largest monthly decline since records started being kept in 1947, driven mostly by precipitous drops in energy costs, according to the Labor Department Producer Price Index. Prices dropped 0.4 percent in September and slid 0.9 percent in August. Prices in the core index, which excludes the more volatile food and energy sectors, rose 0.4 percent in October.
Wholesale prices for domestically manufactured women’s and girl’s apparel were flat in October from the previous month and declined 0.1 percent from a year earlier. Prices for all apparel were also flat last month compared with September and increased 0.9 percent versus October 2007.
The PPI is not a key indicator for apparel pricing, however, since the vast majority of the clothing sold in the U.S. is imported. The Consumer Price Index, which tracks retail prices of all goods, will be released today.
As the economy struggles, inflationary concerns have been replaced with fears of deflation, in which falling prices and demand can spiral out of control.
“Inflation is yesterday’s problem,” said Nigel Gault, chief U.S. economist at IHS Global Insight. “It is remarkable that in just a few months fears have switched from inflation to deflation, a testament to how suddenly the global economy’s expansion has turned into recession.”
Producer prices for women’s and girls’ dresses, suits and pantsuits, and jeans and slacks were flat in October compared with September. In year-over-year comparisons, producer prices of dresses increased 1.5 percent, suits and pantsuits dropped 1.9 percent, and jeans and slacks fell 1.1 percent.
Wholesale prices for woven shirts and blouses increased 0.1 percent in October from the previous month, and were up 3.8 percent in 12-month comparisons. Producer prices for women’s and girls’ tailored jackets and vests advanced 0.2 percent in month-to-month comparisons and were up 1 percent for the year. Knit shirts and blouses increased 0.1 percent in October, but declined 0.3 percent from the previous year.
Prices for apparel fabric, also called textile mill products, dropped 0.2 percent in October compared to September and rose 5.5 percent from the same period a year ago. Home furnishing textile prices, or textile product mills, increased 0.3 percent in October and 3.5 percent year-over-year.
Deeper in the product pipeline, prices are starting to come down. Synthetic fiber prices fell 4.1 percent in a month-to-month comparison, but were up 3.2 percent from October 2007. Yarn prices slid 0.2 percent in the month, but were up 8.3 percent for the year. Finished fabric prices dropped 0.4 percent in October and increased 5.4 percent year-to-year. Greige fabric costs were flat in October compared with September and rose 3 percent from October 2007.
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