WOMEN’S PRODUCER PRICES FLAT

Byline: Joanna Ramey

WASHINGTON — Wholesale prices in the domestic women’s apparel industry during September remained unchanged against August, a pause following four consecutive monthly increases, the Labor Department reported Friday in its Producer Price Index.
The retreat from rising prices for women’s apparel occurred as prices for all finished goods at the wholesale level last month increased 0.5 percent, the second consecutive monthly uptick after seven months of declines. However, compared to September 1996, wholesale prices overall remained unchanged, as were prices for women’s apparel.
The September gain for producer prices as a whole — a measure of cost pressures that can in turn, put upward pressure on retail prices — largely reflected a 1.5 percent jump in energy prices, the largest gain since December.
Higher prices for new cars and tobacco also contributed to the increase, which was presaged by comments two days before by Federal Reserve Chairman Alan Greenspan. In testimony before the House Budget Committee, Greenspan said the nation’s prolonged seven-year period of low inflation was being threatened by the economy’s growth and heavy demand for workers.
Any increases in operating costs is bad news for apparel manufacturers, who, in a low-inflation environment, have been better able to shoulder competition from lower-priced imports, said Carl Priestland, economist, American Apparel Manufacturers Association.
“I will become concerned about inflation only if it continues to increase a half percent for several months in a row,” said Priestland, who said the economy was being stuck somewhere between an inflationary and recessionary cycle. The fact that women’s apparel prices were unchanged in September likely reflects competition from increases in lower-priced imported apparel, he said.
“We’ve had a decent year as far as apparel consumption, although manufacturers are experiencing some malaise,” Priestland said. “The economy isn’t spurting along as Greenspan would like to make us believe, but at the same time, it’s not falling.”
Sandra Shaber, economist with the WEFA Group, Philadelphia, said retailers are under inflationary pressure to increase wages, given the nation’s low unemployment rate. But how much stores, in turn, would be able to increase prices is problematic, given that consumers continue to be extremely value-conscious. This situation puts apparel manufacturers in a bind,, she said.
“The increase in the overall price index is a little disturbing, but I really don’t think it will continue to increase like this,” she said. “The only thing that is worrisome is where energy prices might be going.”
Meanwhile, all apparel prices in September declined a seasonally adjusted 0.2 percent against August, but were up 0.2 percent from year-ago levels. Wholesale prices for men’s and boys’ apparel last month declined 0.1 percent and were up 0.5 percent from September 1996. Wholesale prices for girls’, children’s and infants’ apparel for the month increased 0.1 percent and were unchanged from year-ago levels.
Inflation also continues to be minimal in the domestic textile industry, where wholesale prices last month were unchanged against August and were up 0.2 percent against September 1996 levels.
“Fortunately, raw material prices have been moving downward, and synthetic fibers and cotton prices have been lower,” said David Link, chief economist, American Textile Manufacturers Institute, said orders and shipments were steady after declining from a surge in business in July.
Synthetic fiber prices last month declined 0.4 percent against August and were down 1.5 percent from year-ago levels, as prices for processed yarns and threads were off 0.1 percent in September and dipped 2.3 percent over the year. Prices for gray goods increased 0.3 percent for the month and were up 0.8 percent from September 1996, as prices for finished fabrics increased 0.5 percent for the month and were up 0.2 percent from year-ago levels.
Women’s apparel categories with notable price fluctuations in September were slacks and jeans, which dropped 1.3 percent for the month and were off 0.1 percent from year-ago levels.
Prices for blouses and shirts were unchanged for the month and down 4.7 percent from September 1996, as prices for knit sport shirts rose 3.8 percent for the month and 2.4 percent in the year. Wholesale prices for robes and dressing gowns were unchanged for the month, but dropped 3.2 percent from year-ago levels, as girdles, corsets and accessories prices were unchanged for the month and rose 4.2 percent in the year.

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