By  on August 14, 2008

WASHINGTON — Women’s retail apparel prices surged a seasonally adjusted 2.1 percent in July — the largest monthly increase in prices since March 2006 — but a decrease in prices from last year indicates that inflation might not be the only force at work, the U.S. Labor Department reported Thursday in its Consumer Price Index.

Women’s apparel prices last month fell 1.4 percent compared with July 2007. Retail prices for all apparel increased 1.2 percent in July compared with June and 0.8 percent compared with the same period a year ago.

The price increases for the month were primarily due to less discounting than expected by retailers, said Jessica Penvose, an analyst with the Labor Department. Penvose noted women’s apparel and jewelry increases had the largest impact on overall apparel prices.

Within women’s apparel, the largest price increases were in the dress category, which shot up 5.5 percent from June. Women’s outerwear increased 2.8 percent, women’s suits and separates grew 1.8 percent and the combined category of women’s underwear, nightwear, sportswear and accessories was up 1 percent.

In yearly price comparisons, results were more modest. Women’s dresses were up 0.1 percent and outerwear increased 0.2 percent. Prices for suits and separates fell 2 percent, and the underwear, nightwear, sportswear and accessories category slid 1.1 percent.

Girls’ apparel prices increased 1.8 percent from June and were flat compared with last year. Jewelry was up 1.9 percent.

While total apparel prices in July were “soaring,” there is no certainty economic forces are the only thing in play, said Charles McMillion, president and chief economist at MBG Information Services.

“This could partly be a sign of higher-priced imports due to the decline in the value of the dollar, but it appears largely a function of changing seasonal adjustment patterns,” McMillion said. “Apparel prices are up just 0.8 percent year over year and virtually unchanged since January.”

Some observers saw the price increases as a sign of future stress for the industry.

“Clearly, apparel prices are starting to percolate,” said Richard Yamarone, chief economist at Argus Research Corp. “I think this is just the beginning of a considerable upward trend in prices for apparel, accessories, footwear and related items.”

As manufacturing and shipping costs increase due to rising fuel prices, labor costs and other elements, the prices of apparel items could continue to go up, he said.

The so-called “core prices,” which exclude the more volatile food and energy sectors, increased 0.3 percent in July compared with June and 2.5 percent from a year earlier. Consumer prices on all goods, including food and energy, increased 0.8 percent in July. In June, consumer prices surged 1.1 percent, the largest increase in 26 years, further stoking fears of an inflationary spiral and causing the Federal Reserve Board to indicate it is unlikely to make any additional moves on interest rates for the remainder of the year.

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