RETAIL RTW PRICES UP; CAN DEFLATION BE EASING?

Byline: Joanna Ramey

WASHINGTON — Are women’s apparel prices at retail finally climbing out of the gutter?
That’s up for debate, analysts say, as they ponder Thursday’s release of the Labor Department’s Consumer Price Index, which showed women’s apparel prices up a seasonally adjusted 0.2 percent in November against October, the second consecutive monthly rise for the category.
Given that women’s apparel prices last month, as compared to November 1994, declined only 0.8 percent, it appears prices could be finally making a comeback, a Labor analyst said. While November was the 16th consecutive month with a year-over-year price decline, the dip was only a fraction of the 4.3 percent annual drop seen last November, she said.
“The deflation trend seems to be slowing,” the analyst said, noting how agency data collectors, who fan out to retail stores each month, saw fewer storewide markdowns in November compared to last year.
Carl Steidtmann, director of research, Management Horizons, hesitates to read too much into the two months of price increases, although he expects the year-over-year declines in women’s apparel for 1995 to be less severe than 1994, which plunged a record 4.4 percent. Steidtmann forecasts that 1995’s year-over-year decline in prices will be around 1 percent, which he cautions needs to be viewed in context.
“That means the prices are still lower than one year ago and 5.4 percent lower than two years ago,” he said. “We are still experiencing deflation, and the forces that brought that about are still in place and we expect it to continue.”
One theory behind the two-month upswing in women’s apparel prices is that high-end specialty store retailers selling luxury goods are doing well, which means they can raise prices, helping to offset the prolonged discounting by mid-market stores.
“It really matters whether you’re upscale or downscale,” said Donald Ratajczak, director of the Economic Forecasting Center, Georgia State University. “People who shop at higher-end stores are feeling wealthier. The other extreme is struggling and expect lower prices.”
Irwin Cohen, chairman, Deloitte & Touche’s trade, retail and distribution group, says he isn’t optimistic about the direction of apparel prices for the coming months.
“I don’t see any reason why there should be any kind of price increase,” Cohen said, hesitating to see two consecutive months of women’s apparel price increases as indicating a trend. “This theory that the upper end may be holding prices up may be true. An awful lot of wealth has been created by an increase in the stock market. But I see no reason at this point to suspect that there has necessarily been a bottoming out of prices. I think a little more time is needed to be able to tell us what is happening.”
The last time there was a consecutive monthly increase in women’s apparel prices was September and October 1994. This year’s October monthly rise of 1.2 percent was the first monthly increase since July’s 1 percent rise.
Meanwhile, within the separate women’s apparel categories, prices for coats and jackets in November increased 3.3 percent against October and were up 3.2 percent over the year as prices for dresses dipped 0.1 percent for the month and were down 0.8 percent from year-ago levels. Prices for separates declined 0.9 percent for the month and were off 3.2 percent from November 1994. Suit prices increased 4.4 percent for the month and were up 2.3 percent from year-ago levels, as underwear, nightwear, hosiery and accessories prices were down 0.3 percent for the month and increased 1.9 percent over the year.
For all apparel, prices last month dipped 0.1 percent against October and were off 0.4 percent from November 1994. Prices for men’s apparel declined 0.1 percent for the month and were down 1.1 percent over the year. Girls’ wear prices for the month were up 1 percent and for the year down 0.8 percent. Boys’ wear was down 1.8 percent for the month and up 1.6 percent for the 12 months.
In the overall economy, prices for all retail goods were unchanged for the month and up 2.6 percent over the year, a rosy picture that analysts say could lead the Federal Reserve to resume easing of interest rates. November marked the first month since March 1991 that the CPI has not seen a month-to-month increase.
— Fairchild News Service

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