WASHINGTON — Retail apparel prices continued to show signs of inflationary pressure for the fourth consecutive month in June, rising a seasonally adjusted 0.5 percent, as retailers held on to some pricing power despite weakening consumer demand, the Labor Department’s Consumer Price Index showed Tuesday.
Men’s apparel prices rose 0.5 percent in June compared with May on a seasonally adjusted basis. Women’s apparel prices fell 0.5 percent, suggesting that demand might be stronger for men’s apparel than women’s apparel. Girls’ apparel prices were up 1.9 percent while boys’ wear retreated 1.3 percent.
The increase in prices overall “is hard to pin down because we have been noticing for a few months that input prices have been coming down, not just cotton prices, but energy costs are significantly lower, and we’re just not seeing those cost savings being passed along to consumers,” said Jeet Dutta, senior economist at Moody’s Analytics. “Even [the Producer Price Index for June] suggests costs have indeed been coming down in the apparel category and yet consumer prices have inched up and, in fact, accelerated.”
Dutta noted the decline in the women’s apparel category is more in line with what he expects to start seeing as a result of lower raw material prices.
“It does seem like in the women’s category, we are seeing what we would expect to happen — that cost savings are being passed along to consumers,” Dutta said. “It could be that in the men’s category, retailers are experiencing a stretch of stronger demand” and able to maintain more pricing power.
In women’s wear, outerwear prices fell sharply, by 3.5 percent, in June compared with May, while retail prices on dresses fell 2.1 percent and prices on suits and separates declined 0.7 percent.
In men’s, shirt and sweater prices rose 2.2 percent last month, while prices on suits, sport coats and outerwear increased 1 percent. Some categories experienced deflation as prices on pants and shorts fell 1.9 percent while prices on furnishings declined 1 percent.
The overall CPI, a key gauge of inflation in the U.S. economy, remained flat in June as gasoline prices dropped. The June report followed a 0.3 percent decline in May. Core prices, excluding volatile food and energy prices, edged up 0.2 percent in June.
“Slower emerging market growth, poor conditions in Europe, and renewed weakness in the American economy are placing downward pressure on U.S. consumer import prices and world commodity prices,” said Chris G. Christopher Jr., senior principal economist at IHS Global Insight. “Reduced price pressures on household budgets will most likely not stimulate spending since poor job prospects, declining confidence and gyrating stock markets will keep most American spending habits cautious and careful.”