By  on November 17, 2005

WASHINGTON — The new millennium has seen clothing trends from hippie chic to everything pink, but one theme endures — consumers are paying less to look fashionable.

The cost of women's apparel shrunk 0.3 percent in October after factoring in seasonal fluctuations, according to the Labor Department's monthly Consumer Price Index. Prices were down 2.3 percent compared with the same period last year.

The steepest declines within the women's category were in suits and separates, which registered a 0.6 percent dip last month, leaving prices 3.9 percent below year-ago levels.

Depressed by cutthroat retail competition and a rush of imports, overall retail apparel prices have fallen for at least seven years, as prices on all goods and services in the economy rose. The Labor Department reported that prices across the economy increased 0.2 percent in October — the lowest level since June — indicating that inflation remains in check, for now. The CPI grew 1.2 percent in September and 0.5 percent in August.

The CPI takes into account the value of the goods sold. So if the price of a dress remains the same from year to year, but better materials are used — going from rayon to a silk and rayon blend, for instance — the change would register as price deflation.

There seems to be a lot of this kind of trading up going on, especially as import policies have relaxed, unleashing production capacity in countries with ready supplies of low-cost labor, such as China and India.

"The average out-the-door retail price for most retailers is down, particularly in the department and mid-tier world," said Kathy Bradley-Riley, senior vice president of merchandising at The Doneger Group, a buying and consulting firm. "A continuing challenge for retail is how to up the average out-the-door [price]. They're doing that by giving better quality, more detailing, a little more novelty."

Smith Barney broadline analyst Deborah Weinswig said she has seen pricing stability because of better offerings from retailers.

"You're keeping the price point stable, but giving higher-quality goods," she said.

The access to foreign sourcing has helped stores offer more to consumers.

"As retail prices come down, their cost of goods sold has also come down," said Philip Zahn, debt analyst at Fitch Ratings. "Their margins haven't been squeezed as much as you might think they would be given the deflation at retail. You may see people buying somewhat more than they would otherwise buy, if everything is cheaper. I don't think stores are necessarily getting more people into the stores, so what's supporting sales is probably people buying more units."

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