By  on February 22, 2007

WASHINGTON — Tighter inventory controls and more full-price selling in January contributed to higher retail prices for women's apparel last month, according to the Labor Department.

Retail prices of women's apparel increased a seasonally adjusted 1.3 percent in January compared with the prior month — the biggest increase since March 2006 — and were up 3.6 percent from a year ago, according to the department's Consumer Price Index released Wednesday.

"It was a larger-than-normal increase for January," said Jessica Penvose, economist at the Bureau of Labor Statistics.

Part of that rise resulted from promotional discounts that were not as deep as usual during the month. About 50.2 percent of the women's apparel surveyed for the index was on sale. Retailers might have been better able to hold prices in January in part because many consumers, armed with gift cards received over the holidays, came ready to spend and were more willing to pay at or near regular price.

Stores successfully bumped up prices for high-demand looks, such as dresses, where price tags swelled by 5.8 percent in January and were 13.7 percent ahead for the last 12 months.

"Those who can get the higher prices, do," said Rich Yamarone, chief economist for Argus Research Corp.

By contrast, outerwear prices slid 5.4 percent for the month and 6.1 percent for the year as temperatures, in the Northeast particularly, stayed well above normal. Prices of suits and separates, which represent 53 percent of the women's apparel survey, rose 1.8 percent for the month and 5.6 percent from January 2006.

Prices that consumers paid on all goods and services increased a greater-than-expected 0.2 percent for the month, and there was a 0.8 percent jump in medical care prices. Excluding the volatile food and energy sectors, so-called "core" prices increased 0.3 percent, the largest advance since June.

"We know that energy and food can be very volatile, so we look at the core measure for a sense of the underlying price activity," said Yamarone. "If that's creeping higher, that can be problematic for consumer spending and, more importantly, for the Federal Reserve and interest rate policy. If the core continues to trend higher, and it has, the Fed might be forced to raise rates."Standing steady at 5.25 percent since June, the benchmark federal funds rate influences interest costs on everything from credit card purchases to home mortgages.

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