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Apparel Prices Fall 1.8% for Full Year

WASHINGTON — Retail prices for women’s apparel ended the year on a low note, as price-cutting and deflation led to further erosion.<br><br>Compared with December 2001, women’s apparel prices fell 2.1 percent, locked in the same...

WASHINGTON — Retail prices for women’s apparel ended the year on a low note, as price-cutting and deflation led to further erosion.

This story first appeared in the January 17, 2003 issue of WWD.  Subscribe Today.

Compared with December 2001, women’s apparel prices fell 2.1 percent, locked in the same pattern of year-over-year declines, the Labor Department reported Thursday in its Consumer Price Index, the most widely watched gauge of inflation. In December, prices for women’s apparel fell 0.5 percent against November.

Meanwhile, all apparel retail prices finished the year 1.8 percent below prices in December 2001 and 0.5 percent below prices in November. Girls’ retail prices were the only bright spot, ending the year with a 1.7 percent gain over December 2001, but falling slightly by 0.3 percent against November.

“Apparel prices are suffering from cheaper imports and heavy discounting,” said Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University. “The rest of the world is not doing so well, so if they sell us apparel, it is at huge discounts and that also shows up in lower prices at retail.”

Dhawan noted that a weakened dollar could offset some of the price declines and put an upward pressure on prices, although too much inflation without a strong demand would also create problems for retailers.

Frank Badillo, senior economist at Retail Forward, said: “[The numbers suggest that] in the last few months, the deflation rate of overall apparel has abated. A year ago at this time, it was climbing to over 3 percent, so a full percentage point has been knocked off this year.

“In early 2001, the industry faced high inventories, but they whittled them down over the course of 2001 and early 2002 by cutting prices. And now, they are at a more manageable level.”

In the overall economy, all retail prices rose 0.1 percent in December, including volatile energy and food prices. For the year, overall prices rose 2.4 percent. But excluding the volatile energy and food sectors, prices were up 1.9 percent.

In the four women’s apparel categories tracked by the government, prices for underwear, nightwear, sportswear and accessories fell 3.8 percent against December 2001; outerwear prices fell 0.3 percent in December against November, but rose 0.4 percent for the year; dress prices fell 1.7 percent last month, but rose 1.2 percent against December 2001, and suits and separates prices dipped 2.4 percent against a year ago.