MARCH APPAREL PRICES UP, BUT DEFLATION STILL LOOMS

Byline: Joanna Ramey

WASHINGTON — Retail prices for women’s apparel rose a seasonally adjusted 0.7 percent in March for the second straight monthly increase, the Labor Department reported Tuesday in its Consumer Price Index.
Despite the monthly gains — pegged to the introduction of spring merchandise — women’s apparel prices last month were off 5.2 percent compared to March 2001, marking the 11th consecutive year-over-year decline.
The 12-month drop in women’s apparel prices shows that retailers continue to be wary about scaring price-sensitive consumers away with higher prices, said John Mothersole, senior economist at the WEFA Group.
“There are still very competitive conditions at retail,” he said.
Carl Steidtmann, chief economist at Deloitte Research, said the large monthly gain in women’s apparel “reflects low inventory levels and the fact that retailers brought in inventory early for the Easter season.”
Even with the back-to-back increases in women’s apparel prices, Steidtmann said prices aren’t likely to stay on the rise.
“We’re still in a deflationary environment,” he said.
Retail prices for all apparel shot up a seasonally adjusted 1.2 percent last month, but compared to March 2001 were down 3 percent. Girls’ apparel prices declined 0.7 percent for the month and were down 4.6 percent compared to a year ago.
Rosalind Wells, chief economist at the National Retail Federation, said apparel continues to be a bargain and that “should be a plus for demand.”
The size of the apparel price increases were second only to energy price hikes, which jumped 3.8 percent. The 8 percent surge in gasoline prices topped all energy prices, however compared to March 2002, gas prices last month were off 13 percent.
Despite the strong apparel and energy price increases, retail prices overall rose 0.3 percent for the month. Excluding volatile energy and food prices, the index rose only 0.1 percent.
The CPI is viewed as a gauge of inflation. For the first quarter, all retail prices increased at a 3 percent annual rate, an increase that reflects the hike in energy prices. By comparison, the CPI increased 1.6 percent for all of 2001.
Meanwhile, women’s suits and separates prices jumped 6 percent in March for the largest one-month gain among the women’s apparel categories tracked by Labor. However, over the year, suits and separate prices fell 7.7 percent.
Dress prices climbed 1.4 percent for the month and rose 0.9 percent from year-ago levels. Outerwear prices also gained 1.4 percent for the month and fell 4.9 percent from March 2001. Underwear, nightwear, sportswear and accessory prices increased 1.6 percent in March against February and were off 3.1 percent over the 12-month period.

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