WASHINGTON — The Federal Reserve Board clearly doesn’t have anything to worry about when it comes to apparel price inflation: Retail prices for clothing across the board in December, the U.S. Labor Department’s Consumer Price Index showed Wednesday.
Apparel prices fell a seasonally adjusted 0.7 percent last month. Women’s prices declined 0.8 percent, while men’s apparel prices dropped 1.5 percent, girls’ apparel prices slipped 1.5 percent and boys’ apparel prices fell 2.1 percent.
Within the women’s sector, prices for outerwear were off 2.3 percent, while prices for suits and separates dropped 1.1 percent. Prices for the combined underwear, nightwear, sportswear and accessories category declined 1 percent, while prices for dresses showed the only strength, with a 1.7 percent increase.
In men’s wear, prices for the combined suits, sport coats and outerwear category declined 2.5 percent, while prices for furnishings dropped 1.4 percent. Prices for shirts and sweaters were flat, as prices for pants and shorts rose 0.4 percent.
Michael Montgomery, a U.S. economist with IHS Global Insight, said the overall CPI index, which rose 0.3 percent in December, was driven by a significant increase of 3 percent in gasoline prices. Core CPI prices, excluding the volatile energy and food sectors, rose 0.2 percent.
“Weak goods prices are of little surprise because of the strong dollar, but labor costs matter more in services, and the mark of firming wages can clearly be seen in service prices,” Montgomery said. “The outlook for 2017 is more of the same. Labor costs should keep service prices climbing nearly 3 percent year-over-year, while the continued strength in the dollar keeps goods prices well-behaved. That should stabilize price gains for most of the first half. The second-half prognosis is a function of the dollar and whether the spurt in commodity prices worldwide overwhelms the greenback and moves goods from negative to positive territory. Odds are that it will, but not enough to be worrisome.”
Montgomery said the price environment this year will be similar to that of 2016, with increases in shelter, medical care and energy prices but “moderate gains” in other areas.
“That should not sour consumers’ moods, but also will not lift their purchasing power like in the good old days of falling gasoline prices,” he added.