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Apparel Prices Continue to Decline

WASHINGTON — Wholesale prices for domestically produced women’s apparel in June remained stuck in a deflationary pattern and fell 0.2 percent after dipping 0.3 percent in May, the Labor Department reported Friday in its Producer Price...

WASHINGTON — Wholesale prices for domestically produced women’s apparel in June remained stuck in a deflationary pattern and fell 0.2 percent after dipping 0.3 percent in May, the Labor Department reported Friday in its Producer Price Index.

Compared with June 2002, women’s wholesale apparel prices rose 0.1 percent.

All apparel prices were up 0.1 percent in June against May, but fell 0.7 percent against June 2002. Wholesale prices for girls’ apparel rose 0.6 percent in June and rose 1 percent year over year.

“The trend at both the wholesale and retail levels is down, down, down,” said Charles McMillion, chief economist at MBG Information Services. “You just have to lower prices to make the sale.”

He attributed the price declines to a sluggish economy and a strong surge of imports.

“The problem is that with our standard of living, you can’t lower wages and benefits low enough or even work out tax holidays locally,” McMillion said. “It is really hammering profitability.”

Steve Spiwak, an economist at Retail Forward, attributed wholesale price declines to “bulging” retail inventories.

“That will keep the pressure on prices through back-to-school from coming up,” said Spiwak. “Bad weather and other factors have caused retail inventories to soar in recent months and there will be a lot of promotional activity to clear those and make room for back-to-school apparel.”

Spiwak said the rising unemployment rate and more layoffs will dampen enthusiasm for buying apparel. However, that could be offset by a tax cut, which gives families $400 per child and kicks in at the end of the month, he said.

“That’s a sizeable chunk of change to take to apparel stores for a back-to-school spending spree,” Spiwak said. “That will help prop up sales despite a weak employment situation.”

In the overall economy, wholesale prices for all U.S.-made goods rose 0.5 percent in June, driven mainly by soaring energy prices.

Among the categories of women’s apparel tracked by Labor with notable domestically produced price swings in June were prices for sweaters, jackets and jerseys, which fell 0.3 percent in June, but plunged 9.4 percent compared with June 2002. Prices for dresses fell 0.2 percent in June and fell 1.3 percent against a year ago, while wholesale prices for knit outerwear, sportshirts and sweatshirts fell 0.1 percent last month and fell 4.5 percent against June 2002.

Producer prices for sheer hosiery fell 1.2 percent in June, but rose 7.1 percent against a year ago, while prices for skirts, including uniforms, rose 0.9 percent in June, but fell 1.8 percent year over year.