WASHINGTON — Inflationary pressures put the squeeze on domestic apparel and textile manufacturers struggling to keep costs down in the face of rising energy prices stemming from Hurricanes Katrina and Rita, the Labor Department reported Tuesday.
In the overall economy, wholesale prices shot up 1.9 percent in September — the largest monthly rise in more than 15 years — as the fallout from the hurricanes continued to take a toll on prices, according to the Producer Price Index. There was a 0.6 percent jump in August. Stripping out volatile energy and food prices, the core inflation rate increase was 0.3 percent.
Wholesale prices on U.S.-produced women’s and girls’ apparel rose a seasonally adjusted 1.1 percent and inched up 0.4 percent above year-ago levels. All domestically produced apparel prices were up 0.6 percent for the month and 0.1 percent year-over-year.
U.S. textile producers are struggling to find ways to absorb the spike in energy costs.
“Our natural gas costs almost doubled over a year ago,” said Jim Chesnutt, president and chief executive officer of National Spinning Co., based in Washington, N.C. “It will break all of us unless we can get customers to share in the increases. They don’t have a choice. It has to be passed upstream.”
“Apparel margins are so razor thin,” said Mark Ulmer, executive managing director of the cost and industry group at Global Insight. “On the margin, the producers that differentiate themselves with niches or brands probably have the ability to pass along slight increases.”
Carl Steidtmann, chief economist at Deloitte Research, said the modest rise in the core rate cuts both ways.
“The overall [core] rate of inflation seems to be pretty low and the good news is that the rise in energy prices is not making its way into the price of other goods,” Steidtmann said. “The bad news is that it means a lot of retailers and manufacturers will have to eat those energy costs and that will have a negative impact on profitability.”
Many prices in the women’s and girls’ category fluctuated on a year-over-year basis. Prices for knit shirts and blouses rose 3 percent against September 2004, while prices for underwear jumped 5.5 percent and prices for bras rose 1.9 percent. Conversely, dress prices fell 4.1 percent against a year ago, while prices for jeans and slacks fell 1.9 percent.
On the textile side, greige fabric prices were down 0.1 percent last month, but were up 2.1 percent over a year ago, while prices for synthetic fibers dipped 0.2 percent on a monthly basis but rose 4.8 percent compared with a year ago, and prices for broadwovens fell 0.2 percent on the month but increased 1.8 percent year-over-year.