By  on March 16, 2007

WASHINGTON — Wholesale prices on U.S.-made women's and girls' apparel inched up a seasonally adjusted 0.2 percent last month, according to the Labor Department Producer Price Index released Thursday.

Prices advanced 0.7 percent compared with a year ago. Contributing to that year-over-year increase were knit shirts and blouses with a 4.2 percent rise, woven shirts and blouses with a 1.8 percent increase and nightwear with a 2.5 percent boost. Dragging down the total were dresses, off 1.9 percent, and underwear with a 2.3 percent decline.

With more than 90 percent of the apparel sold in the U.S. made in other countries, the wholesale prices charged by domestic producers have a minimal impact on the overall retail market, although they feed into larger economic trends that impact consumers.

Prices on all U.S.-made goods last month increased 1.3 percent, the biggest rise in three months, while so-called core prices, which exclude the volatile food and energy sectors, went up 0.4 percent.

The increases in the overall and core readings were at least double what economists had forecast, suggesting that the Federal Reserve Board may find it more difficult to lower interest rates to spur housing and manufacturing.

The market will get another reading on inflation today when the Labor Department releases its Consumer Price Index, which includes all goods sold at retail. If prices move up too quickly, the Fed might seek to cool off the economy by raising the benchmark federal funds interest rate, which has been at 5.25 percent since June. The federal funds rate ultimately affects how much it costs consumers to borrow money for everything from a new car to credit card purchases.

"Moderate growth in consumer incomes, higher gasoline prices and falling housing prices will force retailers to price apparel and other nondurable goods more aggressively," Peter Morici, professor at the University of Maryland's Robert H. Smith School of Business, wrote in a report Thursday. "For retailers, excess capacity will continue to squeeze margins, instigate productivity gains and minimize pass-through of wholesale prices to final consumers for most non-energy and food items."

Last month, wholesale prices on U.S.-made synthetic fibers fell 1.6 percent against a year earlier, as prices on yarns increased 1.9 percent. Prices for greige fabrics declined 0.6 percent, while finished fabrics saw a 1.5 percent uptick.

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