WWD.com/fashion-news/fashion-features/wholesale-apparel-prices-stem-deflation-cycle-in-april-731172/
government-trade
government-trade

Wholesale Apparel Prices Stem Deflation Cycle in April

WASHINGTON — Wholesale prices for domestically produced women’s apparel in April took a break from their deflationary cycle by increasing 1 percent against March, the Labor Department reported Thursday in its Producer Price...

WASHINGTON — Wholesale prices for domestically produced women’s apparel in April took a break from their deflationary cycle by increasing 1 percent against March, the Labor Department reported Thursday in its Producer Price Index.

Compared with last year, prices for women’s apparel at the producer level were up 0.5 percent. However, the government’s data doesn’t reflect renewed pricing power in the flagging U.S. apparel sector, said Charles W. McMillion, chief economist at MGB Information Services.

“Unless we have another month or two of increases, I wouldn’t make too much of these numbers,” McMillion said. “All of the other data we see shows weakening demand, enormous unused domestic capacity and a glut of very low-priced imports.”

In a separate report released Thursday by the Federal Reserve, production at U.S. apparel factories continued their historic decline by falling 1.7 percent against March and 7.3 percent from April 2002. U.S. textile mill production fell 1.5 percent for the month and dropped 6 percent over the year.

For all apparel, wholesale prices were unchanged for the month and increased 0.2 percent from April 2002. Wholesale prices for U.S. textiles increased 0.3 percent for the month, but were down 0.6 percent from a year ago.

In the overall economy, wholesale prices for all goods fell a record 1.9 percent during April against March, largely because of an 8.6 percent plunge in energy prices. The end of the Iraq war spelled price relief for energy, which in March rose 5.7 percent and in February surged 7.4 percent.

Minus the volatile energy and food indexes, wholesale prices were off 0.9 percent.

Despite the overall decline in the April PPI — in March the index increased 1.5 percent — economists don’t see widespread deflation hitting the economy. The Federal Reserve last week issued a statement expressing some concern that an “unwelcome substantial fall in inflation” could further dampen economic growth.

Martin Regalia, chief economist with the U.S. Chamber of Commerce, said since the Fed’s advisory, “we’ve seen the dollar dip a little bit, which tends to boost spending [on U.S. goods from] abroad.” A weaker dollar also “gives [U.S.] producers the chance to raise prices slightly as foreign competitors’ prices go up.”

Frank Badillo, economist with Retail Forward, said the weak dollar’s effect on domestic producer prices may be short-lived if inventories at retail aren’t brought more into balance.

“If inventories are too high, the price cutting by retailers is going to overwhelm any upward pressure” on domestic prices, such as those for apparel, he said.

Meanwhile, among the categories of women’s apparel with significant wholesale price changes in April, on a nonseasonally adjusted basis, were: skirts, which were unchanged for the month but increased 4.1 percent over the year, and hosiery, which surged 8.1 percent for the month and 7.3 percent over the 12-month period. Swimsuit prices jumped 20.2 percent from year-ago levels.