WASHINGTON — U.S.-made knit fabric prices rose at a double-digit clip last month, taking the brunt of inflationary price pressures in February as volatile cotton prices continued to squeeze margins up and down the supply chain, while soaring food prices drove up wholesale prices for all goods and services.
The Labor Department’s Producer Price Index, released Wednesday, showed wholesale prices for domestically produced knit fabrics spiked 25 percent in February compared with January and were up 34.5 percent against a year earlier. Wholesale price inflation also gripped U.S.-made apparel, although at a much lower rate. Those prices rose 1 percent last month compared with January and increased 1.9 percent compared with a year earlier.
While the PPI is not considered a major indicator for apparel because only a small percentage of goods sold at retail are made here, it is still considered a strong barometer for the domestic textile industry. Yarns and apparel fabric are made by such companies as Parkdale Mills Inc., Frontier Spinning Mills and International Textile Group, which operates Cone Denim and Burlington Worldwide. The Consumer Price Index for February will be released on Thursday.
Wholesale prices for all goods and services jumped 1.6 percent in February, due to the largest food price spike since 1974. Food prices rose 3.9 percent for the month, 70 percent of which was attributable to vegetable prices. Core producer prices, which exclude the volatile food and energy sectors, rose 0.2 percent in February, which was a smaller increase than the 0.5 percent jump in January.
“Surging commodity costs are driving headline inflation higher,” said Nigel Gault, chief U.S. economist for IHS Global Insight. “Wages will be the thing to watch — there won’t be an inflationary spiral unless wage inflation picks up. But higher costs are both squeezing profit margins and consumer spending power.”
Among the areas of significant industry price hikes in February were greige circular knit fabric, excluding hosiery, which rose 36 percent, and finished cotton broadwoven fabric, which rose 12.1 percent.
Prices of U.S.-made yarns increased 4.3 percent in February compared with January and spiked 25.2 percent compared with a year earlier. Spun cotton yarn prices rose 9.8 percent last month and soared 65.2 percent year over year, while carded cotton yarn prices rose 10.6 percent in February and soared 75.1 percent compared with a year earlier. Wholesale prices for synthetic fibers fell in February by 0.2 percent and declined 2.9 percent compared with a year earlier.
Men’s apparel prices experienced greater inflationary pressure than women’s apparel prices in February. Wholesale prices for men’s apparel rose 2.3 percent last month and increased 3.1 percent compared with February 2010. Prices for men’s knit shirts showed the largest spike within the category, rising 10.1 percent in February and increasing 9.2 percent year over year. Prices for men’s jeans rose 2.4 percent last month and 2.6 percent against a year earlier.
Women’s apparel prices inched up 0.3 percent in February and also rose 0.3 percent against a year earlier. The biggest price hike was in women’s knit shirts and blouses, which rose 4.2 percent in February and increased 4.9 percent compared with a year earlier.