WASHINGTON — Domestically produced apparel prices continued their downward spiral in May, as deflationary pressure touched all facets of the supply chain.

This story first appeared in the June 14, 2002 issue of WWD. Subscribe Today.

The Labor Department reported Thursday in its Producer Price Index that wholesale prices for U.S.-produced women’s apparel fell 2.3 percent in May against April. Compared with the year-ago level, domestically produced women’s apparel prices declined 0.1 percent.

Wholesale prices for all apparel fell 1.9 percent last month, but gained 0.1 percent for the year. Girls’, children’s and infants’ apparel prices rose 0.9 percent last month and 0.7 percent against the year-ago level.

“There is global overcapacity and weak demand,” said Charles McMillion, chief economist at MGB Information Services.

He said most executives are concerned about inventory, which he claimed will increase in June and lead to strong pressure on wholesale prices.

“That goes right to the bottom line,” said McMillion. “It squeezes costs, so they are looking where they can cut profit margins if they have any.”

McMillion also said the apparent shift in production from Latin America to Asia and China in particular has put additional pressures on wholesale prices.

“Price pressures from China and Asia are more severe than they are from Mexico and the Caribbean,” he said.

For all U.S. goods, wholesale prices last month fell 0.4 percent, the biggest decline since December.

Among the women’s wholesale price categories tracked by Labor with significant price fluctuations were:

Sweaters, jackets and jerseys, which saw prices plunge 13.5 percent last month against April and down 0.3 percent against the year-ago period.

Dresses, which fell 5.1 percent last month and fell 0.1 percent against May 2001.

Slacks, jeans and dungarees, with wholesale prices falling 4 percent in May, but were flat against the year-ago level.

On the plus side, producer prices for blouses and shirts, excluding knit sportswear and sweaters, rose 4.2 percent last month but fell 0.1 percent against May 2001.

Producer prices for tailored jackets rose 1 percent in May, but fell 0.8 percent compared with year-ago levels.

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