APPAREL PRICES DOWN 1.8% FOR YEAR
Byline: Joanna Ramey
WASHINGTON — Retail prices for women’s apparel declined for the third consecutive year in 2000, falling a seasonally adjusted 1.8 percent, the Labor Department reported Wednesday in its Consumer Price Index.
The drop is the sharpest decline for women’s apparel prices in the last three years. At the end of 1999, as well as 1998, women’s prices posted 0.6 percent declines.
The strong dollar, which allowed for bargain prices on imported apparel, as well as steep retail promotions to spur consumer spending, were cited by analysts as causes for 2000 being a deflationary year for retail prices of women’s apparel.
Diane Kutyla, an economist with the Consumer and Business Group at Deloitte & Touche, said she doesn’t expect prices to fall much farther and should eventually increase this year.
“Consumers will be coming back (to stores) as interest rates fall. You’ll see stronger buying, which will eventually lead to stronger prices in apparel,” said Kutyla, forecasting this upswing to occur sometime in the spring.
Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University, also doesn’t expect apparel prices to decline further this year, but he also isn’t expecting any significant increases.
With the economy growing at a slower pace, Dhawan said the dollar will weaken, which in turn will take a bite out of retailers’ savings on imports. However, productivity gains in the manufacture of mid-to-high-end apparel should work to offset this loss in savings, he said.
Dhawan said lower interest rates should also keep consumers in a more positive mindset to buy, compared to 1994 when rates were higher and retailers slashed women’s apparel prices that year by 4.4 percent.
Meanwhile, in the overall economy consumer prices for all retail goods rose 3.4 percent, the largest increase in a decade. The increase was largely fueled by a surge in energy prices, which began to dissipate toward the end of the year, but could rise again as OPEC acts to tighten oil supplies.
For the month, women’s apparel prices took a slight hit in December, declining 0.4 percent against November.
In the categories of apparel tracked by the government, prices for dresses fell 8.2 percent last year and were down 3.4 percent for the month, as prices for suits and separates posted a year-over-year 1.6 percent decline and a 4.4 percent drop for the month.
The only category to post a price increase was outerwear, which jumped 2.8 percent over the year and rose 1.7 percent for the month. This was likely caused by steeper markdowns in 1999 compared to 2000, which saw stronger outerwear sales.