APPAREL PRICES RISE

Byline: Kristi Ellis

WASHINGTON — Women’s apparel retail prices rose a seasonally adjusted 0.7 percent in March, marking the second consecutive month of increases, the Labor Department reported Tuesday in its Consumer Price Index.
Compared to March 2000, women’s apparel prices shot up 1.5 percent, the second year-over-year increase since October 1998.
The rebound in women’s apparel prices came as a surprise to many economists in light of a weaker economy.
“We are seeing an attempt on the part of retailers to rebuild pricing structures and margins following the last couple of years of steady price declines,” said Carl Steidtmann, chief retail economist at PricewaterhouseCoopers.
Retailers are raising spring and summer prices at the same time sales at apparel and accessories stores fell a seasonally adjusted 0.7 percent in March.
“In retail sales, we are seeing a slowdown in the discount sector, which is surprising, and that sector is heavily price oriented,” said Steidtmann. “Some of the price increase also reflects a mixed change in where apparel is now being sold.”
Michael J. Donnelly, senior economist at the WEFA Group, said, “Retail prices for women’s apparel are showing resilience in the face of a structural downturn in the economy. You have to wonder when prices will start to fall, particularly in [women’s] apparel.”
Attributing the increase in women’s apparel sales to a larger sample pool this year, a Labor analyst claimed it was “still too soon to say that apparel has rid itself of deflation.”
In the overall economy, inflation was moderate as prices for all retail goods last month increased 0.1 percent, reflecting another downturn in energy prices. In February, lower energy prices pushed retail prices up a moderate 0.3 percent. Compared to March 2000, prices for all retail goods increased 2.9 percent.
“The relative stability in the overall number will most likely turn up in April,” predicted Donnelly.
He noted that prices for “core” goods — excluding the volatile food and energy sectors which rose 0.2 percent in March — are much “too high for what we should expect in a relative business contraction.”
Additionally, medical care costs and housing, two key components of the CPI, have also continued to increase.
“Unless those two items start to moderate, it is difficult to believe that the Federal Reserve will continue to ease back on interest rates,” Donnelly said.
Meanwhile, retail prices for all apparel in March rose 0.4 percent against February, but compared to March 2000, they declined 0.2 percent. Girls’ apparel prices rose 0.8 percent for the month and increased 1.2 percent over the year. Retail prices for men’s wear declined 0.6 percent in March and fell 3.2 percent over the year.
In the categories of women’s apparel tracked by Labor, prices for dresses shot up 5.2 percent in March and were up 4 percent over March 2000. Suit and separates prices, which are not seasonally adjusted, rose 7 percent in March and were up 1.5 percent over the year, as prices for underwear, nightwear, sportswear and accessories increased 1.4 percent in March against February, but fell 0.1 percent from year-ago levels.
Outerwear prices fell 2.9 percent in March, but increased 3.1 percent over the year.

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