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Price Slide for Women’s Apparel Continues

Retail prices for women’s apparel in April fell a seasonally adjusted 0.4 percent against March, as stores took advantage of imported bargains.

WASHINGTON — Retail prices for women’s apparel in April fell a seasonally adjusted 0.4 percent against March, as stores took advantage of imported bargains and sought to lure shoppers with sales, the Labor Department reported Friday in its Consumer Price Index.

Compared with April 2002, retail prices for women’s apparel were off 3.4 percent, part of a long-term deflationary slide.

Carl Steidtmann, chief economist at Deloitte Research, said the April decline in women’s apparel prices — and the 0.6 slide in apparel prices overall — can be largely pegged to import bargains, which have become more generous as quotas on foreign garments approach their final Jan. 1, 2005 elimination.

Limits on apparel and textile imports by World Trade Organization members are approaching the end of their 10-year phaseout.

“That’s primarily driving all of this,” Steidtmann said. “You have a mad global scramble to find ever-lower-priced places to produce apparel.”

However, Steidtmann said, continued sluggish demand for apparel remains a factor in retail price cutting. Compared with April 2002, all apparel prices declined 3.8 percent. Retail prices for girls’ apparel fell 0.8 percent in April against March and dropped 4.2 percent from year-ago levels. Boys’ apparel prices declined 0.6 percent for the month and plunged 6.8 percent over the year.

A Labor apparel analyst also blamed damp weather for retail discounts. Consumers “aren’t buying as much spring and summer items as retailers expected,” she said.

In the overall economy, prices for all retail goods in April fell 0.3 percent, the largest drop in 18 months. The government cited price declines in apparel, food and autos as contributing to the decline, but a 4.6 percent plunge in energy prices was the largest factor.

The drop in overall retail prices follows last week’s statement by the Federal Reserve about the potential of a destabilizing decline in prices. In March, retail prices increased 0.3 percent. In April, retail prices, when compared with the year before, showed relative strength with a 2.2 percent gain.

Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University, said “the possibility is there” for the economy to slide into a deflationary cycle in the next three months. However, “I think we will avoid it,” said Dhawan, citing increases in consumer confidence that should translate into an increase in retail sales and stronger prices.

Consumer buying accounts for two-thirds of U.S. economic growth.

But Dhawan said the global economic impact of SARs, coupled with downturns in Germany and Japan, could create a further drag on the sluggish U.S. economy and prices.

“What we need is the corporate expenditures to start with capital and hiring,” Dhawan said. “I see that happening six to nine months down the road, as long as consumers don’t lose their cool.”

Meanwhile, among the categories of women’s apparel tracked by the government, retail prices for women’s outerwear dropped 3.2 percent for the month and fell 3.4 percent over the year, as dress prices declined 2 percent in April against March and plunged 6.5 percent from April 2002.

Prices for suits and separates increased 0.5 percent for the month, but dropped 2.8 percent for the 12 months. Underwear, nightwear, sportswear and accessories prices rose 0.5 percent in April against March and dropped 6.8 percent over the year.