By  on April 16, 2009

WASHINGTON — Recessionary pressures created volatility in retail apparel prices in March.

Apparel prices declined a seasonally adjusted 0.2 percent last month, but rose 1.4 percent compared with the same period a year earlier, the Labor Department said Wednesday in its Consumer Price Index.

Women’s apparel prices dropped 0.6 percent month-to-month, and increased 0.3 percent from March 2008. Men’s apparel prices advanced 0.5 percent in March, and rose 2.7 percent in 12-month comparisons.

“Prices have been very volatile,” said Charles McMillion, president and chief economist, MBG Information Services. The volatility comes partly from an unpredictable economy and partly from seasonal factors that affect apparel pricing. Seasonality was complicated by heavy discounting in recent months, particularly around the holidays, he said. “We’re still just catching up.”

Prices for all goods and services decreased 0.1 percent in March as food and energy costs declined. In February, prices for all goods and services advanced 0.4 percent. Year-over-year, the index declined 0.4 percent in March, the first 12-month decline since August 1955.

Core inflation, which excludes the volatile food and energy sectors, rose a higher-than-anticipated 0.2 percent. March was the third month in a row in which core prices increased by that amount. In 12-month comparisons, core prices rose 1.8 percent.

“The CPI is in negative territory, but the economy is not in a deflationary spiral,” said Nigel Gault, chief U.S. economist, IHS Global Insight.

The declining apparel prices seen in March have more to do with unusual data from late 2008 and early 2009, said Jessica Penvose, an analyst with the Labor Department. Dresses, for example, saw uncharacteristic price increases during that period, which led to price decreases in March.

Dress prices tumbled 8.4 percent in March, but rose 4.1 percent from the same period a year earlier. Women’s outerwear prices increased 5 percent in March and 4.8 percent year-over-year. Prices for suits and separates increased 0.1 percent in month-to-month comparisons, but declined 2.2 percent year-over-year. The broad women’s underwear, nightwear, sportswear and accessories category declined 0.7 percent from the previous month, and advanced 3.2 percent from the same period a year ago. Girls’ apparel prices dropped 1.5 percent in March, and increased 0.8 percent year-over-year.

Men’s suits, sport coats and outerwear declined 1.4 percent for the month and 4.2 percent year-over-year. Prices for furnishings increased 1.4 percent in March, and spiked 7.1 percent in 12-month comparisons. Men’s shirts and sweaters declined 0.7 percent month-to-month, but rose 3.3 percent from March 2008. Men’s pants and shorts prices increased 2 percent in March and 3.1 percent from the same period a year earlier. Boys’ apparel prices decreased 2.6 percent month-to-month, while prices increased 1.1 percent year-over-year.

“Retailers are bouncing all over the place trying to stay in business and also trying to make some money,” McMillion said. Looking ahead, retailers are likely to continue cutting prices in an effort to draw consumers into stores to spend, he said.

Anecdotal evidence from the Federal Reserve’s Beige Book, also released Wednesday, indicated that economic activity continued to be weak across the country, but several regions said the pace of declines slowed.

Consumer spending was still weak, the report said, but sales rose slightly or declines moderated in Boston, Cleveland and Chicago. Shoppers in Philadelphia, Dallas and San Francisco reportedly looked for value in the last few weeks and opted for lower-priced items. Overall, according to the Beige Book, luxury items and big-ticket merchandise suffered the most while necessities fared better.

“Customers are going to value. They are buying lower-priced products even when the high-end products go on sale,” said one retailer in the Philadelphia area.

Price-consciousness in consumers was reported in most districts, with some saying it worked in favor of discounters and against department stores and specialty retailers. In San Francisco, sales at department stores and specialty stores were described as “dismal” and continued declines were reported.

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