Retail Apparel Prices Increase for Second Straight Month as Overall CPI Rises
As inflation slowly makes its way into the supply chain, retail apparel prices increased 1.5% in February following a 1.7% rise in January, the U.S. Bureau of Labor Statistics reported Tuesday in its Consumer Price Index (CPI).
The overall CPI increased 0.2% in February on a seasonally adjusted basis, after rising 0.5% in January and was up 2.2% from a year earlier. The indexes for shelter, apparel and motor vehicle insurance all rose and contributed to the monthly increase. The food index was unchanged in February, while the energy index increased slightly.
The so-called core index, minus the volatile food and energy sector, also increased 0.2% percent last month following a 0.3% gain in January. Along with shelter, apparel and motor vehicle insurance, the indexes for household furnishings and operations, education, personal care and airline fares also increased in February, while the indexes for communication, new vehicles, medical care and used cars and trucks declined.
Prices for women’s and girls’ apparel increased 1.5% in February, while men’s and boys’ clothing prices were up 1.7%. Both categories increased for the second straight month after being down in the promotionally charged retail environment in December.
In the women’s sector, prices rose in all categories, led by a 4.8% increase in outerwear and a 2.4% hike in suits and separates, while prices for dresses were up 1.9% and tags for the underwear, nightwear, sportswear and accessories group were 1.1% higher.
In men’s, price increases of 4.3% in shirts and sweaters and 1.2% in pants and shorts were partially offset by decreases of 0.8% in furnishings and 0.2% in the suits, sport coats and outerwear group.
Footwear retail prices rose 1.5% in the month, with gains of 3 percent in women’s and 1.8% in men’s, and a falloff of 0.5% in boys’ and girls’.
Ken Matheny, executive director of U.S. economics at Macroeconomic Advisers by IHS Markit, said, “The CPI for apparel continued to rebound from soft readings late last year.”
“The increase in the core CPI was driven by various indices, including transportation services and apparel,” Matheny said. “The 12-month change in the core CPI remained at 1.8% in February for the third consecutive month. Over shorter horizons, the core CPI has accelerated. The three-month annualized change rose to 3.1% in February. While boosted by residual seasonality in January, this was nevertheless the highest three-month reading in a decade.”
The Organization for Economic Development said Wednesday in its “Interim economic Outlook” that U.S. gross domestic product is projected to pick up to between 2.75% to 3 percent over 2018-19.
OECD said,”Tax reductions and higher government expenditure reinforce the momentum in domestic demand from strong confidence, solid job creation, past gains in household wealth and the rebound in oil production. Gradual monetary policy normalization is set to continue, bringing higher long-term interest rates, as the labor market tightens further and wage growth and inflationary pressures pick up.”
Meanwhile in the apparel supply chain, fiber prices have been on the rise. Spot prices on U.S. cotton averaged 80.48 cents per pound for the week ended March 8, the highest weekly average since May 2014, when the average was 82.11 cents a pound, according to the U.S. Department of Agriculture. The weekly average was up from 78.60 per pound the week before and further above the 74.84 cents per pound reported the corresponding period a year ago, USDA said.
The USDA’s weekly National Wool Review’s average of Australian wool delivered to the U.S. came in at $5.82 per pound last week compared to $5.63 a month earlier.