WASHINGTON — Retail prices for women’s apparel increased a seasonally adjusted 0.3 percent in January, recovering some of the ground lost in December when holiday discounts forced prices down 2.8 percent, the U.S. Labor Department reported on Wednesday.
However, when compared with January 2004, women’s apparel prices last month fell 0.7 percent, the Labor Department said in its monthly Consumer Price Index, a closely watched inflation barometer.
All apparel prices in January gained 0.3 percent and were also up 0.3 percent from the previous year. By comparison, in December, all apparel prices dropped 0.4 percent for the month and 0.2 percent for the year.
In the last year, retail apparel prices overall have experienced less deflationary pressure in contrast with the last nine years, partly because of the dollar’s declining value against foreign currencies, which increases most import prices, said Charles McMillion, president and chief economist at MBG Information Services. An exception is apparel imported from China because that country’s currency is pegged to the dollar.
McMillion said deflationary pressures on retail apparel prices would increase in 2005 as retailers start to reap savings from not being restricted by apparel import quotas, which were eliminated Jan. 1 for World Trade Organization members. The quotas had been in place for about three decades.
However, McMillion said other factors may offset apparel price deflation. They include increased sales of domestically produced apparel as the result of concern over global supply chain disruptions because of terrorism as well as continued consolidation among apparel industry companies.
“Last year was a transition year, and we may find that part or much of this year is a transition year, as well,” McMillion said.
For all retail goods, prices in January increased 0.1 percent from December. The lack of significant price increases is being viewed as a signal that the Federal Reserve will continue to increase interest rates at a modest pace. Economists on Tuesday expressed concern that the Fed could act more rapidly, since the Producer Price Index, a measure of inflation at the wholesale level, gained 0.3 percent last month.
Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University, said even with a more tempered retail price report, the U.S. economy is still facing some uncertainty. He cited as an example the slowing European economies and soft Japanese economy as dampening demand for U.S. exports.
Among women’s apparel categories tracked by the government, prices for outerwear declined 1.2 percent in January against December and gained 0.3 percent for the year, while retail prices for dresses increased 1.2 percent for the month and declined 0.9 percent against a year ago. Retail prices for suits and separates increased 0.3 percent in January and fell 0.2 percent from a year ago, while prices for underwear, nightwear, sportswear and accessories fell 0.3 percent last month and dropped 1.6 percent from January 2004.