By  on January 16, 2008

WASHINGTON — Seasonally adjusted wholesale prices for U.S.-made women's and girls' apparel held steady in December, compared with November, as prices on all domestically made goods fell 0.1 percent.For all of 2007, however, women's and girls' apparel prices rose 0.9 percent as wholesale prices across the economy raced ahead 6.3 percent, according to the Labor Department's Producer Price Index, released Tuesday. The overall increase was driven by higher energy and food costs and was the largest such jump in 26 years. Excluding food and energy goods, wholesale prices were up 2 percent for the year.Faced with the fallout in housing prices, the subprime mortgage crisis, the attendant credit crunch on Wall Street and signs of weakening job growth and tepid consumer spending, the Federal Reserve Board is still expected to emphasize the slowing economy rather than inflation when setting interest rate policy."Although upside risks to inflation remain, there is nothing in today's report to blunt the wave of enthusiasm for a full 50-basis-point reduction in the target federal funds rate," said Kenneth Beauchemin, U.S. economist for Global Insight, in an analysis.Led by chairman Ben Bernanke, the Fed reduced its benchmark Fed funds interest rate three times and 100 basis points since September to 4.25 percent. Lowering rates further would make it cheaper for consumers and businesses to borrow money and could both stimulate economic growth and fuel higher prices.Economists will get another reading on inflation, the type visible to the average shopper, when the Consumer Price Index is released today. That report will give a broader reading on apparel prices, since more than 90 percent of the apparel sold in the U.S. is made abroad. Within the women's and girls' category, December wholesale prices on knit shirts and blouses rose 1.1 percent versus a year earlier, while dresses were up 0.9 percent and underwear increased 0.7 percent.Among textile producers, synthetic fiber prices were flat last month, versus December 2006, as yarns were up 3.6 percent, greige fabrics rose 1.8 percent and finished fabrics were ahead 1.6 percent.

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