Wholesale Prices Show Stability

Wholesale prices of domestically made women’s apparel strengthened a bit in March, although deflationary pressures remain strong.

WASHINGTON — Wholesale prices for domestically produced women’s apparel showed signs of strength in March with a 0.7 percent gain, but previous consecutive monthly declines have eroded pricing power, according to economists.

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Compared with March 2002, domestic wholesale prices for women’s continued a pattern of year-over-year declines and fell 0.5 percent, according to the Labor Department’s Producer Price Index released Friday.

Wholesale prices for all apparel gained by 0.5 percent in March, but fell 0.1 percent against March 2002. Prices for girls’, children’s and infants’ apparel remained unchanged last month versus February, but rose 2.8 percent against the year-ago period.

Textile mill producer prices fell in March by 0.3 percent and fell 0.9 percent year-over-year.

“Apparel prices are impacted by surges in imports and a lot of unused capacity,” said John Mothersole, senior economist at Global Insight. “Apparel makers are in a cutthroat environment that doesn’t look to change dramatically in the year ahead.”

Charles McMillion, chief economist at MBG Information Services, said the slight increase in prices was skewed because the monthly numbers have declined over such a long period of time.

“Producers have no pricing power,” said McMillion. “There’s so much global overcapacity, as well as domestic overcapacity, and everyone is under enormous price pressures to move merchandise.”

He noted that the apparel and textile industries have been facing deflationary price pressure for the past seven years.

Meanwhile, wholesale prices for all finished goods for the month continued a monthly rise and increased 1.5 percent due to high, but steadily declining, energy prices and an increase in car prices.

“Given a quick end to the war with Iraq and captured oil fields that seem intact, we expect oil prices to decline more by end of year,” said Mothersole.

The majority of categories of women’s apparel tracked by the government remained unchanged or increased slightly in March against February. Producer prices for skirts were flat last month and rose 4.1 percent against a year ago, while prices for domestically produced slacks, jeans and dungarees remained unchanged last month, but fell 2.3 percent against a year ago.

Wholesale prices for dresses rose 2.7 percent in March against February, but fell 0.7 percent against March 2002, while producer prices for knit outerwear, sport shirts and sweatshirts rose 0.3 percent last month and increased 0.2 percent year-over-year.