WASHINGTON — Retail prices for women’s apparel in June posted a modest 0.1 percent decline, after three consecutive monthly gains, the Labor Department reported Friday in its Consumer Price Index.
Women’s apparel prices last month, when compared with June 2003, gained an unseasonally adjusted 1.4 percent, the third consecutive monthly increase after about five years of declines. Falling prices can have a downward effect on sales and profits.
However, last month’s year-over-year gain in women’s apparel prices moderated from a 2 percent rise in May and a 0.7 percent increase in April.
All apparel prices increased a seasonally adjusted 0.2 percent for the month. In May, apparel prices rose 0.3 percent, and there was no change in April.
Ken Goldstein, economist with the Conference Board, said the stronger apparel prices reflect the declining value of the dollar against other currencies, which increases the cost of imported apparel. More than 95 percent of garments sold at retail in the U.S. are imported, according to industry estimates.
However, Goldstein said retailers may also be testing the depth of rising consumer confidence by raising prices.
“Clothing prices have been going down for so long, the customer has gotten used to it,” Goldstein said, questioning whether shoppers will tolerate sustained higher prices. “The big question now is what the prices will be telling us in a few weeks when back-to-school sales start.”
The slower pace of apparel price increases in June reflects a mellowing in general of all retail prices for the month, which rose 0.3 percent after a 0.6 percent gain in May. Dips in energy and food prices during June helped to temper prices overall.
Retail prices as measured by the CPI are considered the government’s best barometer of inflation and gains that have occurred every month this year. On June 30, the Federal Reserve raised interest rates for the first time in four years to gird against the expanding economy fueling inflation.
Rajeev Dhawan, director of economic forecasting at Georgia State University, said inflation appears to be subsiding.
“The economy is finally out of the woods and the question now is, how fast is it going to run?’’ he said. “That depends on what happens with energy prices and how the geopolitical situation works out.”
Retail prices for women’s outerwear fell 1.5 percent against May, and were down 2.6 percent from June 2003. Dress prices were off 0.6 percent for the month and 0.9 percent over the year.
Suit and separates prices fell 1.1 percent for the month but increased 4 percent over the 12 months. Women’s underwear, nightwear, sportswear and accessories prices climbed 1.9 percent in June against May and were down 0.9 percent from June 2003.