Retail Apparel Prices Rose in January as Inflation Accelerated
WASHINGTON — Fueling speculation the Federal Reserve Board is likely to raise interest rates again next month to help control inflation, retail apparel prices rose significantly in January as overall consumer prices posted their biggest increase in nearly four years, the U.S. Labor Department’s Consumer Price Index showed Wednesday.
Apparel prices were up a seasonally adjusted 1.4 percent last month. Men’s apparel prices rose 3.6 percent while women’s prices increased 1.6 percent. There was weakness in the boys’ and girls’ categories. Prices for boys’ apparel fell 1.5 percent, while those for girls’ apparel declined 0.1 percent.
Within the women’s sector, prices for dresses showed the most strength, posting a 5.2 percent increase, followed by prices for suits and separates, which rose 1.8 percent. Prices for outerwear increased 0.9 percent but prices for the combined underwear, nightwear, sportswear and accessories category fell 0.3 percent.
In men’s wear, prices for furnishings increased 3.8 percent, while prices for pants and shorts gained 3.2 percent. Prices for the combined suits, sport coats and outerwear category rose 2.3 percent and prices for shirts and sweaters were up 1.7 percent.
In the overall CPI index, prices rose 0.6 percent in January, driven by energy and food prices. The core CPI, excluding the volatile energy and food sectors, increased 0.3 percent.
Apparel prices, up 1.4 percent, led the overall core price rise, according to Chris G. Christopher Jr., director of consumer economics at IHS Global Insight.
“Although the spike in gasoline prices accounted for approximately 50 percent of the increase in the headline index, many other consumer prices are starting to gain momentum,” Christopher said. “The bad news from the consumer perspective is that gasoline, restaurant and core retail goods prices increased at a substantially faster clip than in previous months.”
He said core consumer prices had their strongest growth in five months with “substantial” increases in apparel, recreation, new motor vehicles and core commodity prices.
“The good news for consumers is that core service prices did not accelerate and that ‘food-at-home’ prices were flat, although unfortunately not in negative territory as in previous months,” Christopher said.
The January CPI report “increases the chances” of a Federal Reserve rate hike in March, he said.
“It is obvious that consumer prices have gained momentum in recent months,” he added. “This is not the best thing in the world for lower-income households living paycheck-to-paycheck. The positive January employment report and the uptick in consumer price inflation are pointing to a Fed rate hike.”