WASHINGTON — Wholesale prices on domestically produced women’s and girls’ apparel rose a seasonally adjusted 0.5 percent in May, but were down 0.2 percent compared with a year ago, according to the Labor Department’s Producer Price Index released Tuesday.

Prices on all finished U.S.-made goods inched up 0.2 percent, as the core rate of inflation, which excludes the volatile food and energy sectors, advanced 0.3 percent after rising 0.1 percent during the two preceding months.

The Consumer Price Index will be released today, providing a broader view on inflationary pressures, particularly in apparel, where more than 90 percent of goods sold at retail are imported.

“There’s a lot of data suggesting that there is an inflation problem, but it’s pretty early to make the call,” said Edward Leamer, director of the UCLA Anderson Forecast.

In addition to the PPI report, Leamer said higher prices on imports have also pointed to inflation.

Wall Street investors and economists closely watch signs of inflation to gauge the response of the Federal Reserve Board, which has raised the benchmark federal funds interest rate 16 times over the last two years to 5 percent in an effort to keep the economy from overheating. Fears of inflation helped spur a sell-off on Wall Street on Tuesday. Investors drove the Dow Jones Industrial Average down 86.44 points to 10,706.14, erasing the index’s gains for the year.

The Fed’s next meeting to consider interest rates will be held June 28 and 29. Leamer said the Fed should hold off on further increases for now.

“Enough already, let’s see what this is going to do because we think the second half is going to have slower economic growth,” he said. “Slower growth means lower incomes and therefore not as vibrant a retail sector as we had over the last couple of years.”

Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business, wrote in a report that inflation continued to come from international oil and the commodities market, both of which are beyond the Fed’s control.

“If the Fed acts too vigorously to contain inflation, it risks derailing the economic expansion and pushing up unemployment,” he said.

This story first appeared in the June 14, 2006 issue of WWD. Subscribe Today.

Within the women’s and girls’ category, last month’s prices on knit shirts and blouses were 0.7 percent below a year earlier, while nightwear prices were down 5 percent. Registering price increases were tailored jackets and vests, up 0.7 percent, and underwear, with a 2.2 percent rise.

In the textiles arena, prices on synthetic fibers increased 2.1 percent against a year earlier, while yarns were up 1.5 percent and greige fabrics rose by 5.2 percent.

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