WHOLESALE PRICES FLAT IN NOV.
Byline: Alison Maxwell
WASHINGTON — Wholesale prices for domestically produced women’s apparel in November were flat, but competition from low-cost imports continued to pull down year-over-year prices.
According to the Labor Department’s Producer Price Index released Friday, prices were unchanged from October to November, following a 0.4 percent increase from September to October.
Prices had dropped consecutively since May and culminated in an August drop of 0.8 percent — the largest monthly decrease since April 1996. Compared with a year ago, women’s apparel wholesale prices in November were down 0.3 percent, following a 0.5 percent year-over-year decrease last month.
The index for all U.S.-made apparel was up for the third consecutive month, registering a 0.2 percent increase in November from October. Overall apparel prices, however, dropped 0.3 percent for the year.
“Prices are staying flat or declining in the apparel industry, primarily because of foreign competition,” said a Labor Department economist. “Lower labor costs enable foreign-based factories to produce labor-intensive products like clothing at lower prices than their American counterparts. The result is that American manufacturers have been unable to raise their prices and have been obligated to cut prices for certain categories of products.”
Wholesale prices for all finished goods rose a modest 0.2 percent in November. Without volatile food and energy prices, the wholesale price index was unchanged from October, which indicates low inflationary pressures. Compared with November 1998, prices were up a seasonally unadjusted 3.1 percent.
If the moderate advance in wholesale prices is matched in the Consumer Price Index to be released Tuesday, inflation concerns at the Federal Reserve could ease, economists said. The Federal Reserve has already raised interest rates three times this year to slow the red-hot economy. Most economists predict that the Fed will hold rates steady at its Dec. 21 meeting due to Y2K concerns.
“This was a mild report,” said Larry Horowitz, a senior economist at Primark Decision Economics in Boston. “It indicates that the Fed is out of the picture until the early spring.”
Horowitz also noted that price pressures on intermediate goods decelerated for the month, so “there is less worry about future inflation.”
Breaking down women’s apparel into categories, the PPI showed notable wholesale price decreases in skirts, which dropped 2.2 percent for the month, and suits, which decreased 3.0 percent. Prices of bras were up 1.9 percent for the month and up 2.1 percent for the year. Women’s dress prices were unchanged for the month, but continued their long-term price decrease, dropping 3.9 percent for the year.