Byline: Kristi Ellis

WASHINGTON — Retailers got a reprieve from deflationary pressures in February, as prices for all apparel rose 0.5 percent, reflecting higher-priced spring merchandise, the Labor Department reported Thursday.
While the news from the Consumer Price Index was a bright spot coming off three months of steep price declines, economists noted that a one-month increase did not make a rebound.
“We had three straight months of significant seasonally adjusted declines,” said a Labor analyst. “If anything, we are rebounding from those big declines. Prices are not heating up.”
Apparel retail prices fell 3.8 percent year over year, which continued the string of year-over-year declines. Women’s apparel also got a boost from stronger spring prices and increased 0.4 percent in February against January, but plunged 5 percent from a year ago. Girls’ prices rose 6.6 percent in February, but also dropped by 3.3 percent against February 2001.
“It will be tough to salvage anything this season,” said the Labor analyst. “It’s not like there are a lot of places in the world where retailers can go source clothing that allows them to keep dropping the costs of production because they still need to hit the same price points.”
Charles McMillion, chief economist at MBG Information Services, said the February price uptick was “good news.”
“There has been a lot of volatility with seasonal adjustments,” said McMillion. “The fact that prices were up shows, at the very least, the sharp price drops November through January have been halted.”
He noted, however, that it does signal a turnaround.
“There is still downward pressure on prices and this does not likely mean that retailers and producers are regaining pricing power,” McMillion said. “But it does mean that the loss of pricing power is no longer in a free fall. Now there is some hope of a return to price stability from sharp deflationary price pressures.”
In the individual categories tracked by Labor, prices for outerwear were up 2 percent in February, but fell 8.2 percent for the year over year. Retail prices for dresses slid down 0.1 percent, but were up 1.8 percent against the year-ago period; while suits and separates prices rose 6 percent last month, but dropped 6.8 percent against the year-ago period.
Underwear, nightwear, sportswear and accessories prices rose 2.8 percent in February, but fell 3.4 percent year over year.

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