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Wholesale Apparel Prices End Year on Down Note

WASHINGTON — Wholesale prices for domestically produced women’s apparel ended the year in a deflationary mode.<br><br>The Labor Department reported Wednesday in its Producer Price Index that prices for U.S.-made women’s apparel were...

WASHINGTON — Wholesale prices for domestically produced women’s apparel ended the year in a deflationary mode.

The Labor Department reported Wednesday in its Producer Price Index that prices for U.S.-made women’s apparel were flat in December against November, but fell 1.1 percent compared with December 2001. The PPI measures only apparel that is produced domestically, which represents a small percentage of overall apparel production that is sourced around the globe.

Wholesale prices for all U.S.-produced apparel fell 0.2 percent last month and fell 0.9 percent against a year ago. Prices for girls’, children’s and infants’ apparel were flat in December and showed the only sign of strength, with a 2.7 percent increase year-on-year..

“For apparel [wholesalers] and retailers, it is a confirmation of continued weakness we have seen in the retail sector for the past six months to a year,” said John Mothersole, senior economist at Global Insight. “The fact that there is a manifest weakness in producer prices is more worrisome for the apparel industry in that it highlights real problems the industry has that tie back to the overcapacity the industry is plagued with.”

However, Frank Badillo, senior economist at Retail Forward, claimed the PPI does not offer the whole price picture. Badillo said, “While domestically produced apparel prices are declining, there is an upward pressure on apparel prices due to the weakened dollar and increases in import prices.”

Most U.S. apparel firms import products and are experiencing a diminishing pressure on prices, as retailers take a firmer hold on inventories, he added. “The two factors tend to diminish the deflation of apparel prices and put an upward pressure on them,” Badillo said.

But he does expect retailers to continue cutting prices, which will further impact wholesale prices for domestically produced apparel, he said.

The PPI for all U.S.-made goods was flat in December, as falling car and truck prices offset rising food and energy costs.

Wholesale prices for U.S.-made dresses, blouses, knit outerwear sport shirts and sweatshirts, sport jackets, brassieres, panties, nightwear and bathing suits all remained unchanged in December against November. Wholesale prices for skirts fell 0.2 percent last month, but rose 4.7 percent against a year ago, while producer prices for sweaters, jackets and jerseys rose 0.2 percent in December, but plunged 13.2 percent against December 2001.