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Retail Apparel Prices See Sharp Drop in Jan.

Retail apparel prices fell sharply last month, marking the largest January decrease since 1949, according to the Labor Department.

WASHINGTON — Despite a moderate increase in overall consumer prices, retail prices for apparel fell sharply last month, marking the largest January decrease since 1949, according to the Labor Department, which released the Consumer Price Index on Friday.

Retail prices for all apparel fell 0.9 percent in January, while apparel prices fell 1.9 percent against January 2002, continuing a pattern of year-over-year declines.

Women’s apparel retail prices fell sharply by 1.1 percent in January against December, on a seasonally adjusted basis. Compared with January 2002, women’s retail prices plunged 2.9 percent.

Girls’ retail apparel prices finally succumbed to the price deflation plaguing other categories and fell 1.6 percent in January. However, those prices gained by 2.8 percent against a year ago.

“The industry faces a flood of cutthroat priced imports, weakening domestic and global demand and an overhang of nearly 35 percent in expensive, idle capacity,” said Charles McMillion, chief economist at MBG Information Services. “Today’s report of severe deflation in the industry indicates just how little pricing power the industry has all along the supply chain and suggests the remainder of the year is likely to be unusually difficult.”

Steve Spiwak, an economist at Retail Forward, said apparel price deflation eased up last year going into the holidays, as retailers steadily pared down inventories.

But January data shows year-over-year prices declined more than they did in December, he noted.

“That was driven by some extra discounting and price cutting to clear out higher inventories that lagged into the first part of the year,” Spiwak said. “This is a last effort to clear out winter gear and make room for spring merchandise so it will be a short-term blip for apparel prices.”

He said he expects price declines to continue in line with continued cautious spending, war worries and market stagnation.

But John Mothersole, senior economist at Global Insight, said he does not expect the apparel retail price declines to be repeated next month.

“As much as you want to stimulate business, you can’t cut prices forever,” said Mothersole.

In the overall economy, consumer prices rose 0.3 percent, driven by higher energy costs, which were a result of a severe winter and fears of a U.S. war with Iraq.

Prices for suits and separates fell 1.5 percent in January against December and plunged 3.6 against a year ago; retail prices for outerwear fell 1.4 percent last month and dropped 0.4 percent against January 2002. Retail prices for dresses fell 0.1 percent last month, but inched up 0.8 percent year-over-year, while prices for underwear, nightwear, sportswear and accessories fell 0.3 percent in January, but fell 4 percent against January 2002.