WASHINGTON — Retail apparel prices fell again in November as overall consumer prices remained flat, the U.S. Labor Department’s Consumer Price Index showed Tuesday.
Apparel prices decreased a seasonally adjusted 0.3 percent in November, following declines in October and September.
“Retail overall is being plagued by deflation,” said Ryan Sweet, director of real-time economics at Moody’s Analytics. “Prices are falling pretty much across all retail segments. That’s one of the reasons why nominal retail sales in the U.S. have been fairly mediocre for the last several months. A lot of it is price-related.”
Sweet said he doesn’t expect “a turnaround in the cards any time soon for apparel prices.”
“Anecdotally, cotton inventories are piling up and that continues to put downward pressure on apparel prices,” Sweet said. “An unseasonably warm winter that we are likely going to experience because of the El Niño may also weigh on apparel prices. Retailers will likely end the holiday season with more inventory than they anticipated and that will likely translate into more aggressive discounting at the end of the holiday shopping season and after.”
Coupled with falling producer prices and import prices, that should keep retail prices low for the foreseeable future, he added.
Prices for women’s apparel fell 0.9 percent, driven by a significant drop in prices for outerwear, while prices for girls’ apparel rose 0.2 percent. Men’s apparel prices fell 0.3 percent, but boys’ apparel prices rose 1.8 percent.
In the women’s category, prices for outerwear fell 5 percent, while prices for the combined underwear, nightwear, sportswear and accessories category dropped 1.4 percent last month. Prices for suits and separates declined 0.8 percent and prices for dresses showed the only sign of strength, edging up 0.1 percent.
Men’s wear price declines were led by the combined category of suits, sport coats and outerwear, which dropped 4.7 percent last month. Prices for shirts and sweaters fell 1.8 percent. Two categories with some pricing power were furnishings, which rose 2.3 percent, and pants and shorts, which increased 0.7 percent.
In the overall economy, retail prices were flat. Core prices, excluding volatile food and energy prices, rose 0.2 percent.
Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University’s Robinson College of Business, said the “culprit” behind deflation in apparel prices is the strong dollar.
“The cost of inputs is going down because of the stronger dollar and retailers are able to maintain [lower prices],” Dhawan said. “For retailers, that is a double-edged sword. They are getting their stuff for cheap [imported products] and so they can sell it cheaply. That’s why we have deflation in apparel.”
Dhawan said soaring auto sales have also eaten into other discretionary purchases such as apparel, which is putting price pressure on retailers.
“People are using their savings from lower gas prices and a little income growth to buy shiny objects, big -cket items like cars and trucks,” Dhawan said. “So they are economizing on things like clothing and [forcing] retailers to lower their prices to sell the product.”
Chris G. Christopher Jr., director of consumer markets at IHS Global Insight, agreed that “a stronger dollar is also assisting in lowering imported consumer goods prices.”
Christopher noted that producer prices for commodities, other than food and energy, fell 0.2 percent in November.
“These prices have been in negative territory on a year-over-year basis since the second quarter of 2013,” he said. “This is good news for consumers and not the best thing for retailers. We expect retail trade inventories to fall in November since consumers came out ready to spend and looking for those good deals throughout the month.”