WOMEN’S APPAREL PRICES RISE 0.9% IN OCTOBER
Byline: Joanna Ramey
WASHINGTON — Prices of women’s apparel at retail are finally firming up a bit.
That was the view of some analysts, as the Labor Department, in its monthly Consumer Price Index, reported Thursday that the price tags in October increased a seasonally adjusted 0.9 percent, the second consecutive monthly uptick after more than two years of deflation.
Just as in September, when women’s apparel prices were up 1.1 percent, analysts pinned part of October’s increase on the continued introduction of higher-priced fall and winter merchandise. In addition, the two consecutive months of price increases reflect a healthy balance in the market between supply and demand for apparel, they say.
“Inventories are very tight, so you would have to have a real falloff in demand to start heavy promotional prices,” said Carl Steidtmann, director of research, Management Horizons. He also cited the ongoing consolidation of retailers as helping to prop up prices by reducing apparel supply.
While Steidtmann and others expect apparel prices to continue firming up in coming months, they say it doesn’t mean that the deflationary trend is subsiding by any great measure. Compared to October 1995, women’s apparel prices last month were down 2.5 percent, the 28th consecutive month without a year-to-year increase. However, by the end of next year, Steidtmann expects apparel prices as a whole, on year-to-year basis, to show an increase of between 1 and 1.5 percent. He sees women’s prices rising somewhere under 1.5 percent.
But for now, prices are well below that of a year ago. “The women’s prices still reflect a long-term trend of deflation. Demand is stronger, but it’s not what retailers would like, so they still have to keep prices down,” a Labor analyst said.
Don Ratajczak, director of the Economic Forecasting Center at Georgia State University, Atlanta, described retailers as not being aggressive in ordering for the holiday season and confident about not having to discount, as they had to in years past, to attract holiday customers. With the number of Christmas shopping days cut by five, and if sales do not meet expectations, however, this optimism could easily be reversed, he said.
“The issue of prices is based on how strong the sales develop,” Ratajczak said.
Regardless of these market forces, Irwin Cohen, chairman of Deloitte & Touche’s Trade, Retail & Distribution Group, remains circumspect about any long-term change in apparel-price deflation. Consumer preference for apparel continues to focus more on informal and low-cost fashions, which are produced around the world and at competitive prices, he noted.
“Consumers are buying more, but they are buying goods at lower price points,” he said.
Helping to keep consumer confidence up is the low inflationary picture in the overall economy, which in October, according to the CPI, posted a slight 0.3 percent increase against September. Prices for all retail goods over the year were up 3 percent.
All apparel prices for the month were up 0.5 percent and were down 1.1 percent from October 1995. Prices for girls’ apparel increased 0.6 percent in the month and were off 3.9 percent over the year. Men’s wear prices at retail increased 0.2 percent for the month and were up 1.4 percent over the 12-month period.
The category with the most influence on the October index for women’s apparel was coats, which increased 6.5 percent for the month and 4.5 percent for the year. The Labor analyst said retailers reported strong coat sales, citing consumer interest in not being caught unprepared should this winter be as cold as the last.
Helping to offset the increase in coat prices was a 3.3 percent dip in dress prices for the month and a 10.4 percent plunge over the year. Prices for separates and sportswear increased 2 percent for the month and were down 1.8 percent over the year.
Prices for suits increased 0.1 percent in October and were down 6.6 percent against year-ago levels, as prices for underwear, nightwear, hosiery and accessories declined 1 percent for the month and increased 1.7 percent from October 1995.