By  on February 23, 2006

WASHINGTON — Retail prices on women's apparel fell a seasonally adjusted 0.8 percent in January on price cuts in the suits and separates area, according to the Labor Department's latest Consumer Price Index, which was released Wednesday.

That trend ran counter to the broader economic picture, which showed prices on all goods rising 0.7 percent. After stripping away the volatile food and energy sectors, the core rate of inflation inched up 0.2 percent, meeting expectations and assuaging the concerns of some economists.

"There was no upward surprise to core inflation and that's good news," said Kenneth Beauchemin, U.S. economist at forecasting firm Global Insight.

Prices at retail can have a dramatic affect on the larger U.S. economy, two-thirds of which is supported by consumer spending. So far, producers haven't passed on the significantly higher energy prices in the form of price increases.

"We have greater competition than in recent history that prevents firms from doing that," said Beauchemin.

The public also believes the Federal Reserve Board is committed to low and stable inflation, he said, predicting the Fed will raise the federal funds rate, which currently stands at 4.5 percent, two more times — typically a quarter point each time — before letting it level out.

Comparing January with a year earlier, women's apparel prices fell a steeper 1.4 percent. Suits and separates were down 2.2 percent for the month and off 3.3 percent versus January 2005. Increased imports, especially from China, have kept downward pressure on prices.

"Women's suits and separates is actually at its lowest index level since it was made its own item in 1998," said Jessica Penvose, an economist at the Bureau of Labor Statistics. "That really was the catalyst for all of women's apparel."

The suits and separates price index, which was set at a base of 100 in 1998, now rests at 85.5.

Prices for women's outerwear fell by 1.1 percent for the month and 5 percent from a year ago, while dress prices slipped 0.2 percent in January, but were up 5.7 percent from a year earlier.

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