CONSUMER PRICE INDEX SHOWS WOMEN’S APPAREL UP 1% IN MAY
Byline: Joanna Ramey
WASHINGTON — Stores are flexing their pricing muscles a bit.
According to the Consumer Price Index released by the Labor Department Tuesday, retail prices of women’s apparel in May increased a seasonally adjusted 1 percent against April, for the fourth consecutive monthly uptick.
However, retailers aren’t going overboard in raising prices even though their sales are increasing at a healthy pace. Compared to May 1997, retail prices for women’s apparel last month edged up a modest 0.2 percent, after posting four consecutive monthly year-over-year declines.
“A 0.2 percent increase isn’t enough to break out the champagne,” said Maureen Allyn, chief economist, Scudder Kemper Investments. “It’s still a very difficult pricing environment. Consumers are happy to buy, but they are still bargain-hunting. If you’re a retailer, you’re still going to have to increase sales on volume.”
Don Ratajczak, economist, Georgia State University’s Economic Forecasting Center, doesn’t expect retailers’ to be able to push prices up much further.
“I don’t know how long the consumer is going to be in this buying mood for apparel,” he said, forecasting a shift in consumer buying patterns to cars in summer months. New auto prices in May dipped 0.3 percent and were off 0.9 percent for the year.
Ratajczak said lower-priced Asian imports will also work to keep the prices of apparel — as well as other consumer goods — in check. Overall, prices of imported goods from Asia declined in May 1.1 percent against April and compared to year-ago levels were down 8.3 percent, according to the Bureau of Labor Statistics.
“As long as the Asian crisis percolates, it’s going to be difficult for any internationally traded commodity to increase prices. And if prices aren’t going up, there’s no reason for the Fed to increase interest rates,” Ratajczak said.
Meanwhile, all retail apparel prices last month increased a seasonally adjusted 0.4 percent against April and were unchanged from year-ago levels. Girls’ apparel prices were up 0.3 percent for the month but down 2.2 percent from May 1997. Men’s apparel prices declined 0.7 percent in May against April and were up 1.8 percent over the 12 months, as boys’ apparel prices increased 0.2 percent for the month and were down 0.9 percent over the year.
The 1 percent monthly gain in women’s apparel prices was largely fueled by a 4.8 percent increase in dress prices, a category beset for some time with deflation until this year. Compared to May 1995, dress prices last month were still down 3.7 percent. However, compared to May 1997, dress prices last month were up 8.3 percent.
A Labor analyst pegged the increase in dress prices to retailers feeling bullish about sales and holding off on any meaningful discounts until later in the summer. Overall, she said there appeared to be fewer sales in May than a year earlier.
“There seems to be a temporary lull in apparel deflation. I don’t know if you can say it’s permanent yet,” she said.
Appearing to be permanent is the prolonged absence of any real inflation in the overall economy. Retail prices for all consumer goods in May increased 0.3 percent against April. Although moderate, the increase was the largest in 17 months. For the first four months of this year and for all of 1997, retail prices on a monthly basis stayed between no increase and a 0.2 percent uptick.
Among the other categories of women’s apparel tracked by Labor, prices for outerwear in May declined 2.1 percent against April and were up 8.3 percent over the year. Prices for suits and separates for the month declined l.2 percent for the month, as prices for underwear, nightwear, sportswear and accessories dipped 0.7 percent in May. Year-over-year price changes for the last two categories were not available.