WASHINGTON — Retail prices of women's apparel fell a seasonally adjusted 2.3 percent last month compared with February, but were up 1.2 percent from a year earlier.
Sharply higher gasoline prices drove up prices on all goods and services by 0.6 percent in March, after a 0.4 percent increase in February, according to the Consumer Price Index released Tuesday by the Commerce Department. But the pace of so-called core prices, which exclude volatile food and energy sectors, slowed to a less than expected 0.1 percent increase, the smallest hike in three months, after advancing 0.2 percent in February.
"The core rate was certainly something that was very positive and that was due in large part to the sharp decline in apparel prices," said Carl Steidtmann, chief economist at Deloitte Research. "It was a little surprising in the apparel category because you had three previous months of a fairly sizable price increase. I think [retailers] brought in a lot of spring apparel in February and got caught in a lot of cold weather. In order to catch up to where they wanted to be in the sales cycle, they started discounting earlier than they usually would have."
Dress prices plummeted 8.1 percent in March and were 0.9 percent higher than in the same period a year ago. Suits and separates prices fell 1.6 percent, but were up 4.5 percent compared with March 2006. Underwear, nightwear, sportswear and accessories prices, calculated as a group, slid 0.6 percent and dropped 4.1 percent compared with last March. The only category that showed signs of pricing strength in March was outerwear, which rose 1.7 percent, but fell 3.7 percent against a year ago.
Women's apparel prices are still down 3.1 percent compared with five years ago, depressed by inexpensive imports and stiff competition among stores.
The CPI is a gauge of inflation, and Tuesday's report may result in a decision by the Federal Reserve Board to leave the interest rate unchanged, economists said.
"I think the Fed is on hold for a long period of time," said Steidtmann, adding the bank is "stuck between a rock and a hard place....They are still concerned about softness...in the housing sector'' and are reluctant to boost interest rates. On the other hand, he said, concerns about inflation "will keep them from cutting the rate."Kenneth Beauchemin, U.S. economist at Global Insight, wrote in a report: "After two elevated monthly readings, the subdued March core CPI number reveals a short-term inflation path that is consistent with the decline so eagerly anticipated by the Fed. Similar improvement during the second quarter will be required before the Fed can take the rate-hike option off the table, however."
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