CPI: EASTER SALES, MARKDOWNS PUSH WOMEN’S PRICES DOWN 0.6% IN MARCH

Byline: Joanna Ramey

WASHINGTON — Retail prices for women’s apparel in March fell back a bit, declining a seasonally adjusted 0.6 percent against February, the first dip after six consecutive monthly increases, the Labor Department reported Wednesday in its Consumer Price Index.
On a year-over-year basis, women’s apparel prices last month also moderated, increasing 0.9 percent against March 1996. In February, women’s apparel prices posted a 12-month gain of 1.9 percent, the first year-over-year increase since a 0.6 percent uptick in July 1994.
A Labor analyst attributed the monthly dip in prices to after-Easter sales and markdowns of fall and winter apparel.
Peter Harding, vice president and national director of marketing, Kurt Salmon Associates, doesn’t take the monthly dip in prices as a sign of deflation returning to women’s apparel. Rather, he forecasts women’s apparel prices to resume a pattern of ever-so-slightly firming to end the year 1 percent above or even with 1996.
However, Harding added, “The prices show that while business is perhaps OK, it certainly isn’t very strong. Retailers are doing everything possible to avoid price increases.”
Carl Steidtmann, director of research, Management Horizons, said a warm winter in some areas has left retailers with a backlog of seasonal merchandise, which contributed to the momentary, monthly dip in women’s apparel prices.
“The trend toward a little higher pricing is still in place,” Steidtmann said, forecasting a 1 percent year-over-year increase in women’s apparel prices for 1995. “I think there is a real desire to rebuild margins and try and avoid price cutting.”
Steidtmann also pointed out that the stronger dollar stretching further in import purchases is also helping retailers build margins without forcing prices up.
The seasonal inventory backlog aside, retailers have largely been able to keep inventory levels in check, which has meant they haven’t had to discount as much to move merchandise, said Irwin Cohen, chairman, trade, retail and distribution group at Deloitte & Touche. However, less-than-robust sales have kept prices from posting any meaningful increases, he said.
Prices for all apparel declined 0.4 percent in March against February and were off 0.5 percent over the year. Girls’ apparel prices dropped 1 percent for the month and were down 3.7 percent from year-ago levels. Prices for men’s apparel decreased 0.5 percent in March and were up 0.6 percent over the year, as boys’ apparel prices increased for the month and were down 2.5 percent from March 1996.
Sandra Shaber, an economist with the WEFA Group, said while demand for apparel has been improving, she says there are signs this “miniboom” has weakened a bit, putting more pressure on retailers to hold prices.
“The market is still very crowded with merchandise. If you don’t have a gimmick, then you are selling a commodity, which sells based on price,” Shaber said, characterizing the mid-to-mass market for apparel.
Inflation continues to be kept in check in the overall economy as retail prices for all consumer goods increased 0.1 percent in March against February and increased 2.8 percent over year-ago levels.
This low-inflation report spurred some optimism on the stock market on speculation that interest rates aren’t on the rise (see related story, page 2). The market has dropped sharply in value in recent weeks over fears the Fed will raise rates and slow economic growth.
Among the women’s apparel categories tracked by the Labor Department, separates and sportswear declined 1.6 percent in March and were up 1 percent compared to year-ago levels. Prices for coats and jackets increased 2.4 percent for the month and increased 1.9 percent over the year, as prices for dresses declined 0.8 percent in March and were unchanged from March 1996.
Prices for underwear, nightwear, hosiery and accessories increased 0.3 percent in March and were up 0.7 percent against year-ago levels.
Prices for suits declined 0.8 percent for the month and were 0.5 percent higher against March 1996.

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