WASHINGTON — Retailers saw some strengthening in prices in October as overall apparel prices rose last month, driven by increases in the women’s and boys’ apparel categories, the U.S. Labor Department’s Consumer Price Index showed Thursday.
Apparel prices increased a seasonally adjusted 0.3 percent last month. Women’s prices rose 0.3 percent, while men’s prices fell 0.2 percent. Boys’ apparel prices rose 0.4 percent, while girls’ apparel prices fell 0.9 percent.
The uptick in October prices followed a 0.7 percent decline in apparel prices in September.
Within the women’s sector, prices for dresses rose 2.1 percent, while prices for suits and separates increased 1.8 percent. Prices for outerwear fell 3.6 percent, while prices for the combined underwear, nightwear, sportswear and accessories category declined 1.3 percent.
In men’s wear, prices for furnishings fell 2.6 percent. There was pricing strength in the combined suits, sport coats and outerwear category, which saw prices rise 1.5 percent and shirts and sweaters which rose 0.9 percent. Prices for pants and shorts increased 0.8 percent.
Ryan Sweet, director of real time economics at Moody’s Analytics, said apparel retailers are still struggling with a lack of pricing power but good news might be on the horizon.
“That should begin to improve over the course of the next year or so,” Sweet said. “We are going to start to see inflationary pressures build more quickly as the job market tightens and the slack in the economy diminishes. Retailers can be hopeful that some of the pricing power that has been lacking over the last several years will come back a little bit.”
Overall consumer inflation is expected to accelerate in 2017 and 2018, Sweet said.
“The key thing is the job market is tightening pretty quickly. We will be at full employment by this time next year,” he predicted. “That is going to boost wage growth so consumers will be able to weather the increase in prices and retailers will feel more comfortable trying to pass higher prices onto the consumer.”
But don’t look for pricing power any time soon.
Sweet said pricing power for the holidays won’t be significantly different than they were last year.
“Retail deflation still remains broad-based across board,” he said.
The overall CPI rose 0.4 percent last month, driven primarily by rising gasoline prices, while core prices, excluding food and energy, increased 0.1 percent.
“There was good news and bad news in this report,” said Chris G. Christopher, Jr., U.S. economist at IHS Global Insight.
On the positive side, food prices were flat and core prices stated at 0.1 percent, but on the negative side, energy prices increased, he noted.
“Overall consumer prices are slowly firming as energy prices start rising,” Christopher said. “ Overall core prices remain tolerably well-behaved in the aggregate. The worrisome areas are still housing and medical costs.”
Christopher also noted there was “continuing relief” in food prices at grocery stores, though prices in restaurants rose.
“The fall in grocery prices is likely to help out many middle- and lower-income households deal with rising energy prices,” he said. “The absence of drag from energy prices will put upward pressure on the headline CPI. We are expecting a modest acceleration of consumer price inflation next year.”