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Retail Apparel Prices Slightly Lower in December

They fell a seasonally adjusted 0.1 percent in December after falling in November, as retailers instituted heavy discounts during the holiday season.

WASHINGTON — Retail apparel prices fell a seasonally adjusted 0.1 percent in December after falling in November, as retailers instituted heavy discounts during the holiday season, the U.S. Labor Department’s Consumer Price Index showed Wednesday.

Women’s apparel prices fell 0.9 percent, with all of the categories declining, except dresses, which increased 0.9 percent in the month. Prices for outerwear were down 2.5 percent, while prices for suits and separates fell 1.5 percent and prices for the combined underwear, nightwear, sportswear and accessories category dropped 0.5 percent. Girls’ apparel prices rose 0.8 percent last month.

Men’s apparel prices fell 0.5 percent in December. Prices for the combined suits, sport coats and outwear category fell 3.1 percent, while prices for pants and shorts declined 1 percent. Prices for furnishings rose 1.4 percent and prices for shirts and sweaters increased 0.1 percent. Boys’ apparel prices were up 1.5 percent.

“Consumer prices were flat in December, thanks to falling pump prices and heavy holiday discounting by retailers,” said Chris G. Christopher Jr., senior principal economist at IHS Global Insight. “If one takes out food and energy prices, the picture is very subdued. Consumer goods prices excluding food and energy have declined on a monthly basis since August, due to retailers cutting prices to gain volume.”

Jeet Dutta, senior economist at Moody’s Analytics, noted that pricing was weak for retailers despite strong retail sales.

“For pricing to have weakened in the face of fairly strong demand suggests that a lot of input costs [such as cotton] have fallen and are finally being passed through to consumers,” Dutta said.

He noted that apparel prices peaked in 2011, reaching close to a 5 percent gain and moderated in 2012 with a 2 percent increase.

Based on that moderation, Moody’s is forecasting further moderation in apparel prices this year, Dutta said.

“Some of the moderation is again because input prices are coming down, but globally there is also quite a bit of weakness and while that has happened there have not been a lot of price gains on imported clothing,” Dutta said. “We expected the global economy to be on stronger footing in the second half of the year but the improvement will be gradual.”

The overall CPI was flat in December, following a slight decline in November. Core prices, excluding volatile food and energy prices, edged up 0.1 percent.

“Looking ahead, there is little threat of deflation, but far more signs of very modest consumer price inflation,” Christopher said. “The cooling in inflation is noticeable for most households; however, consumer confidence is suffering due to political bickering over the debt ceiling crisis.”