By  on March 24, 2005

WASHINGTON — Retail prices for women’s apparel appear in flux, falling a seasonally adjusted 0.4 percent last month after rising in January, according to U.S. Labor Department statistics released Wednesday. Economists predicted long-term price declines.

Consumer prices for women’s apparel were flat compared with February 2004. Retail prices for all apparel fell 0.2 percent last month on a seasonally adjusted basis, but were up 0.1 percent against a year ago.

Prices for girls’ apparel declined 2.4 percent and dropped 5.5 percent compared with a year ago. Men’s apparel prices increased 0.6 percent for the month and year-over-year.

Seasonally adjusted apparel retail prices have fallen at a compound annual rate of 1.3 percent over the last three months, said Charles McMillion, president and chief economist at MBG Information Services. The latest Consumer Price Index “suggests further deflationary pricing pressures may be ahead” in apparel.

“With consumer demand growth slowing and the end of import quotas, I continue to expect that absent strong and broad emergency safeguard measures to limit imports and transshipments from China, apparel price declines will continue in the months ahead,” McMillion said.

World Trade Organization countries eliminated quotas on apparel and textile trade on Jan. 1, and retail executives have argued that they will see savings from the removal of quotas and their associated costs.

“Clearly, we are seeing an impact from the lifting of quotas at the beginning of the year,” said Steve Spiwak, senior economist at Retail Forward.

“A lot of retailers are testing the waters and seeing if they can keep prices sticky to pad their margins,” he said. “However, as the year progresses, my view is the downward pressure on apparel prices will heighten.”

Spiwak said he expects apparel prices to fall 4 to 5 percent by the end of 2005 on a year-over-year basis.

In the overall economy, consumer prices — a closely watched sign of inflation — rose 0.4 in February, marking the highest increase in four months and stoking inflation concerns.

“We are seeing a little acceleration in inflation,” said Carl Steidtmann, chief economist at Deloitte Research. “It is primarily driven by energy prices, but you are seeing those price increases bleed into other sectors of the economy.”Steidtmann said the Fed’s decision Tuesday to boost short-term interest rates for the seventh time in the last year would have “modest impact” on consumer spending.

“It cuts both ways,” he said. “Higher interest rates translate into higher mortgage rates and makes housing more expensive, but other things happen, as well. People who earn interest income see increases because of interest rate hikes.”

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