By  on January 16, 2009

WASHINGTON — The deepening recession exacted its toll on consumer prices in December.

Retail prices of apparel fell a seasonally adjusted 0.9 percent compared with November and were down 1 percent from a year ago, the U.S. Labor Department said Friday in its Consumer Price Index.

Women’s apparel prices declined 1.4 percent and slumped 3.5 percent compared with the previous year. Men’s apparel prices slid 1.6 percent and dropped 1.5 percent year-over-year.

“It doesn’t look good for retailers. It looks like they’re getting hit from every conceivable angle,” said Richard Yamarone, director of research at Argus Research Corp.

Retailers face increased pressures from lower consumer demand, escalating minimum wages and challenges raising cash in the troubled credit markets, and have been forced to cut prices to deal with increased competition, he said.

“You’re going to see tens of thousands of retail jobs lost, tens of thousands of store closings and you’re going to see dozens of bankruptcies,” Yamarone added.

Prices for all goods and services dropped 0.7 percent in December — the third consecutive monthly decline — and rose 0.1 percent in 12-month comparisons, the smallest year-over-year increase since 1954. Core inflation — excluding the volatile food and energy sectors — was zero in December and increased 1.8 percent over the past 12 months.

“Inflation, seemingly so worrying just a few months ago, has vanished; deflation is now the threat,” said Nigel Gault, chief U.S. economist at IHS Global Insight. “Deflation is a pernicious, continuing decline in prices across the board. To assess deflation risks, we must look at core inflation, which has now vanished. The downturn in consumer spending has sent prices of many consumer goods tumbling, notably vehicles and clothing.”

Prices dropped across the board in women’s apparel. Women’s outerwear fell 4.9 percent in December and slid 0.9 percent year-over-year. Dress prices declined 1.1 percent and declined 4 percent for the year. Suits and separates dipped 0.7 percent and fell 5.3 percent year-over-year. The broad underwear, nightwear, sportswear and accessories category was down 0.2 percent in December and 0.3 percent for the year. Girls’ apparel prices slid 2.2 percent and sank 4.4 percent for the year.

Men’s apparel prices fluctuated. Men’s suits, sport coats and outerwear declined 2.5 percent in December and dropped 4.4 percent in the 12-month period. Shirts and sweaters were down 3.1 percent and 4 percent for the year. Men’s pants and shorts prices sank 1.7 percent and declined 3.4 percent year-over-year. Men’s furnishings increased 0.9 percent and spiked 5.8 percent for the 12 months. Boys’ apparel was up 3 percent for the month and 0.2 percent in the 12-month comparison.

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