WASHINGTON — Retail prices for women’s apparel posted a seasonally adjusted 0.6 percent monthly increase in April, easing from March’s 1.5 percent gain, the Labor Department reported Friday in its Consumer Price Index.
Compared with April 2003, women’s apparel prices last month increased 0.7 percent, reflecting the retail sector’s ability to gradually raise prices in recent months after about five years of being plagued by price deflation, which can cut into sales and profits. However, compared with April 1999, women’s apparel prices are down 7.9 percent.
“It looks as if there’s a change in the market for apparel,” said Ken Goldstein, economist with the Conference Board, pegging the pricing power, like in much of the economy, to increased demand.
Aside from women’s apparel prices posting monthly and year-over-year gains, pricing strength in other categories of apparel were mixed.
Girls’ apparel prices fell a monthly 2.8 percent, but increased 1 percent from a year ago. Men’s wear prices were unchanged in April against March and fell 1 percent over the 12 months. Boys’ apparel prices dipped a monthly 0.7 percent, while posting a 1.9 percent gain since April 2003.
Charles McMillion, chief economist with MBG Information Services, said the apparel price increases can be pegged in part to retailers having to pay more for apparel abroad due to the weakened U.S. dollar.
“However, we expect the downward pressures on pricing will return in coming months, due to the relentless pressures of very low-price imports,” McMillion said in a statement.
Economists widely expect the downward pressure on prices to intensify come Jan. 1, when all quotas limiting apparel and textile trade among World Trade Organization members are lifted. Quotas have placed an upward pressure on prices because of the need to back up production and the costs of obtaining quota rights. Moreover, China’s expected dominance after Jan. 1 as a low-cost apparel supplier is expected to put additional downward pressure on retail prices.
In the overall economy, prices for all retail goods increased a monthly, seasonally adjusted 0.2 percent in April, down from March’s inflation-worrisome 0.5 percent gain. Energy price increases slowed in April to a gain of 0.1 percent, following double-digit increases in each of the preceding three months.
The retail price report is the government’s most-watched indicator for inflation, which has been kept in check for years.
Goldstein of the Conference Board said the emergence of retail pricing power in a strengthening economy will likely trigger the Federal Reserve to increase short-term interest rates, but not alarmingly.
“Business is recovering a little bit of pricing power, which is going to feed their bottom lines and allow them to go out and invest…and keep this [economy] spinning,” Goldstein said.
Federal Reserve Chairman Alan Greenspan also has told Congress he is not worried about the specter of rising prices, but he indicated an interest rate hike is inevitable to keep inflation in check. The Fed doesn’t appear anxious to act, though, since earlier this month it left interest rates unchanged at 1 percent. Rates haven’t changed since June 2003.
Meanwhile, retail prices for women’s outerwear in April fell a seasonally adjusted 0.9 percent for the month and were off 4.1 percent from April 2003. Dress prices fell 3.1 percent for the month, but posted a 1 percent hike over the year.
Suit and separates prices gained 3 percent in April against March and increased 3.8 percent from a year ago. Women’s underwear, nightwear, sportswear and accessories prices fell 1.5 percent in April and were down 4.2 percent against April 2003.