WHOLESALE PRICES CONTINUE TO FALL

Byline: Joanna Ramey

WASHINGTON — Wholesale prices for domestically produced women’s apparel in September fell 0.2 percent for the third consecutive monthly decline, the Labor Department reported Friday, bucking the overall price trend for the month.
Compared to September 1999, women’s apparel prices were off 0.7 percent. For the month, all apparel prices increased 0.1 percent and were down 0.2 percent from year-ago levels. Textile prices at U.S. mills were off 0.1 percent in September against August, but were up 0.3 percent over the year.
The price picture for women’s apparel stands in contrast to the overall wholesale inflation picture, which saw the Producer Price Index last month shoot up 0.9 percent, largely the result of higher energy, car and food prices.
“We have a very specific situation here,” said Dave Link, chief economist with the American Textile Manufacturers Institute, citing lingering damage to the U.S. textile and apparel industries from the 1997 Asian economic crisis and currency devaluation, which made already low-priced imports even cheaper.
Consequently, domestic textile and apparel producers, also facing price pressures from retailers, haven’t been able to post meaningful price increases.
“It’s going to impact orders, shipments and profitability,” Link said.
The 0.9 percent increase in wholesale prices overall — a closely watched indicator for impending inflation — caught economists by surprise. Many analysts had expected an increase of no more than 0.5 percent, given the slowdown in economic growth. Wholesale prices are rising at an annual rate of 4.1 percent, compared to a 3 percent increase for all of 1999.
Maureen Allyn, chief economist with Scudder Kemper Investments, said the increase in producer prices isn’t “wildly inflationary,” however she said the price gains could further dampen consumer spending if the increases are passed on at the retail level.
A better picture of retail price pressures will come Wednesday when the government releases its Consumer Price Index.
Allyn said that at least for apparel retailers, given declining prices for domestic garments and low import prices, they won’t have to worry about increasing prices going into the Christmas selling season.
Martin Regalia, chief economist with the U.S. Chamber of Commerce, said the wholesale price report isn’t casting a cloud over the generally strong economic climate. However, Regalia is concerned that unrest in the Mideast could prove disruptive to U.S. oil supplies, and thus the economy, similar to what happened when Iraq invaded Kuwait in 1990.
Meanwhile, women’s apparel categories with notable wholesale price fluctuations in September included, dresses, which were unchanged for the month but declined 3.1 percent over the year, and slacks and jeans, which dipped 0.4 percent for the month and were off 3 percent from September 1999.
Blouse prices were unchanged for the month and fell 1.3 percent from year-ago levels, as prices for suits were also unchanged in September, but fell 4.8 percent over the 12 months.

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