WASHINGTON — Retail prices for women’s apparel fell a seasonally adjusted 1.4 percent in September, marking the third consecutive monthly drop after gaining some strength in the first half of the year.

Women’s apparel prices were down 0.8 percent from their year-ago level, according to the Labor Department’s Consumer Price Index report released Tuesday.

“Weaker demand caused apparel retailers to cut prices to move that merchandise and lay off people in recent months,” said Steve Spiwak, senior economist at Retail Forward. “The lower income household segment has cut back on apparel right now.”

Despite the softness in retail prices, Spiwak’s firm is still predicting the apparel sector will “post reasonably healthy gains during the holidays.”

“The recent soft patch will give way to stronger growth in November and December because income is still rising at a decent clip and there have been some recent job gains,” he said.

However, price deflation in apparel has returned on a year-over-year basis, Spiwak noted, and stressed that prices will continue to fall next year when World Trade Organization nations eliminate quotas on apparel and textile commerce.

Overall apparel prices were flat in September, but fell 0.7 percent against a year ago. Girls’ apparel prices showed the only sign of strength, with a 3.5 percent increase last month, but were off 1.2 percent year over year.

For all retail goods, prices in September rose 0.2 percent for the month. In August, retail prices increased a seasonally adjusted 0.1 percent.

The CPI is the government’s gauge of inflation that economists watch most closely.

“We have to look for a big bump in October from energy and, if it comes on top of the core rate [excluding energy and food prices] moving up, we may start to get people thinking like they did earlier this spring that we’ve got inflation,” said John Mothersole, senior economist at Global Insight. “If the core rate continues to rise at the rate we saw in September for a couple more months, then the Fed [Federal Reserve] could be facing the prospect of having to be more aggressive in raising interest rates at the same time growth is slowing.”

This story first appeared in the October 20, 2004 issue of WWD. Subscribe Today.

Women’s apparel categories tracked by the government for price changes had a mixed performance in September. Prices for outerwear decreased 3.2 percent and were down 4.6 percent against a year ago, while dress prices increased 3.4 percent, but dropped 1.5 percent year over year. Prices for suits and separates were down 2.4 percent, but were up 1.1 percent against a year ago, while prices for underwear, nightwear, sportswear and accessories were down 0.2 percent for the month and 2.7 percent compared with September 2003.

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