CPI: APPAREL DEFLATION CONTINUES
Byline: Alison Maxwell
WASHINGTON — The introduction of full-priced fall merchandise pushed women’s apparel retail prices up 1 percent in August against July, but at the same time the prices registered their largest year-to-year decline since June 1995.
As measured by the Labor Depart-ment’s Consumer Price Index released Wednesday, women’s retail prices last month were down 5.2 percent from August 1998. In June 1995, the prices showed a year-to-year drop of 5.8 percent.
The monthly price increase is the first since May, when prices were up 0.3 percent. But the increase paled in comparison to August 1998’s monthly jump of 2.3 percent. A Labor Department economist attributed the disparity to this past month’s extremely warm weather, which may have prohibited the introduction of as much seasonal apparel as last year.
Looking at the year-to-year drop, Ira Silver, economist with J.C. Penney Co. said, “We’re still dealing with significant deflation in apparel here. Apparel import prices and wholesale prices are down a little, but nothing like this. It’s really just a very competitive environment. People expect prices to come down, and retailers are forced to comply.”
Overall, apparel prices declined for the fourth consecutive month, dropping 0.3 percent in August. Against August 1998, they were down 3.1 percent, the largest decline since November 1952. Men’s apparel prices experienced their largest monthly decline ever — 1.9 percent — and its largest year-over-year decline at 2.2 percent.
Stephan Thurman, deputy chief economist at the U.S. Chamber of Commerce, had this take on the apparel numbers: “Given high retail sales figures, the best observation is that people are very well clothed at very good prices.”
“There’s just heavy discounting and tons of competition,” said Larry Horowitz, an economist with Boston-based Primark Decision Economics.
One of the largest price declines in women’s was in outerwear, down 3.8 percent for the month and 8.6 percent for the year.
“There is a lot of restructuring going on in the outerwear market,” the Labor Department economist said. “Last winter was unseasonably warm, and they lost some sales and are still recovering.”
Prices for women’s dresses were up 1.1 percent in August, but kept with a long term deflationary trend, falling 4.2 percent against last year. Suits and separates, not seasonally adjusted, rose 4.5 percent for the month, but declined 6.1 percent year-over-year. Underwear, nightwear, sportswear and accessories, also not seasonally adjusted, fell 1.9 percent for August and 2.7 percent against a year ago.
Retail prices for all consumer goods rose 0.3 percent in August, just as it did in July. The core CPI, which strips out volatile food and energy costs, increased by 0.1 percent following a 0.2 percent rise in July. Against a year ago, the CPI was up 2.3 percent.