By  on November 18, 2004

WASHINGTON — Retail prices for women’s apparel rebounded in October after last week’s strong sales report for stores, fueling positive signs for the holiday shopping season.

The U.S. Labor Department’s Consumer Price Index, the closely watched inflation barometer released Wednesday, showed that women’s apparel prices increased 1.8 percent on a seasonally adjusted basis and 0.4 percent from their year-ago level.

Economists said the boosts were not necessarily a sign of inflation because the sector has been in a long-term pattern of deflation. Women’s apparel retail prices posted three consecutive monthly declines until October. In addition, prices are expected to fall sharply in the next couple of years as 148 nations of the World Trade Organization lift quotas and remove costs associated with them.

Prices for all apparel rose 0.2 percent in the month, but were off 0.6 percent against a year ago.

“Retailers have a little bit more pricing power, although there was no gain in the year-over-year apparel number,” said John Mothersole, senior economist at Global Insight. “The big bang in retail pricing will occur when quotas come off of textile and apparel products next year.”

Mothersole said the expectation is that prices will drop by 10 to 20 percent in the next couple of years.

Prices for all retail goods increased 0.6 percent, the biggest jump in five months. Record surges in oil and gasoline propelled the boost and those prices have subsided this month. Stripping out volatile food and energy prices, the core index rose a modest 0.2 percent, which economists said showed inflation was in check.

Among women’s apparel categories tracked by the government, prices for outerwear went up 2.4 percent but were down 2.4 percent year-over-year, while prices for dresses gained 2 percent last month and 0.8 percent compared with October 2003. Retail prices for suits and separates were 2 percent higher in October and 2.5 percent higher against a year ago, while underwear, nightwear, sportswear and accessories prices fell 0.1 percent and were down 2.8 percent from the previous year.

Economists are predicting the apparel sector will post healthy gains during the holidays, pointing to an increase in consumer spending, combined with job growth — 377,000 new jobs were created in October — and an easing of oil and gasoline prices.“With the uncertainty of the election behind us now, we should probably see a decent holiday season,” said Carl Steidtmann, chief economist at Deloitte Research. “We had a pause, which was in part related to oil prices, but they have come down and that will add a little extra to non-oil-related consumer spending.”

The Commerce Department’s October retail sales released last Friday reported gains across the board. Sales at clothing and accessories stores had their largest monthly increase in two years and were 6.7 percent higher than October 2003, department stores posted a 0.9 percent increase and general merchandise stores went up 0.9 percent in October and increased 7.4 percent compared with a year ago.

“Stronger-than-expected job growth and a sharp drop in oil prices are setting the stage for solid holiday growth,” said Rosalind Wells, chief economist at the National Retail Federation. “Consumers are demonstrating their resiliency and continue to reinforce our holiday forecast.”

The NRF is predicting a 4.5 percent increase in holiday sales in store categories that include general merchandise, clothing and accessories, furniture and home furnishings, electronics and appliances, sport goods and hobby, book and music stores.

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