Inflation showed some signs of easing last month, according to a key government indicator of prices released on Wednesday.
Retail apparel prices dipped a seasonally adjusted 0.1 percent in July from the previous month, but were still up an unadjusted 5.1 percent from a year earlier, the U.S. Bureau of Labor Statistics (BLS) reported Wednesday in the Consumer Price Index (CPI).
The overall CPI was unchanged in July on a seasonally adjusted basis, after rising 1.3 percent in June. Over the last 12 months, CPI, which measures the rate at which consumer prices are rising, increased an unadjusted 8.5 percent, dipping from the 9.1 percent increase for the period through June.
Though the development might be positive overall, retailers and consumers aren’t out of the woods yet.
“While the July CPI figures suggest that inflation has already hit its peak, inflation is still a significant source of concern for most consumers,” said Matt Pavich, senior director of retail innovation at Revionics, an AI-powered retail price optimization solutions provider. “The longer inflation goes on, the more likely it is for consumers to make permanent the behavior changes they’ve adopted during these inflationary times, whether that’s switching to more private-label products or buying a larger share of their essential goods at dollar stores and value-driven grocers.”
Pavich said retailers must understand how inflation is impacting their customers’ spending, basket size, brand preferences, channel preferences and other behaviors.
“Faced with a triple threat of inflation, supply chain issues and labor shortages, retailers have their work cut out for them to protect both margins and price perception,” he said. “Despite these major headwinds, retailers never forget the core goal of coming through with reliable products and services for shoppers, including being competitive on price.”
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The CPI revealed a mixed bag for apparel prices, with an uptick in women’s, as all other categories fell. In women’s wear, which was up 1.2 percent in July, prices rose 3 percent for dresses, 2.7 percent for suits and separates and 0.3 percent in the underwear, nightwear, swimwear and accessories group, while prices for outerwear declined 1.9 percent.
Men’s wear prices were down 1 percent, with declines of 2.4 percent in the underwear, nightwear, swimwear and accessories group; 1.2 percent in suits, sport coats and outerwear, and 0.5 percent for shirts and sweaters. Bucking the trend in the category was a price increase of 1.3 percent in pants and shorts.
Price decreases of 0.3 percent for boy’s apparel, 0.8 percent in girls’ and 1.3 percent for infants’ and toddler’s clothes were also seen.
Retail footwear prices fell 0.1 percent last month, with declines of 1.4 percent in men’s and 1.2 percent in boys’ and girls’ were countered by a 1.3 percent increases in women’s.
In the home goods arena, prices for household furnishings and supplies rose a seasonally adjusted 0.6 percent in July and were up an unadjusted 10.8 percent from a year earlier. Within the sector, prices for furniture and bedding rose 0.9 percent for the month an 14.8 percent from July 2021.
The apparel price situation follows developments in raw materials. U.S. spot cotton prices averaged $1.06 per pound for the week ended Aug. 4, up from $1.04 the prior week and from 86.31 cents a year earlier.
BLS’s Producer Price Index for June showed synthetic fiber prices had increased 0.6 percent for the month and 9.8 for the year, while processed yarns and thread cost 0.3 percent more from the previous month and 30.8 more compared to June 2021, and finished fabric prices were up 0.6 percent for the month and 14.4 for the year.
Online prices drop
Adobe also announced Wednesday the latest online inflation data from its Digital Price Index (DPI), powered by Adobe Analytics, showed July online prices decreased 1 percent year-over-year, after increasing 0.3 percent in June and dropped 2 percent on a monthly basis.
Adobe said July is the first month where e-commerce entered deflation after 25 consecutive months of persistent inflation online. Most of the categories tracked by the DPI saw month-over-month price decreases in July.
Online apparel prices, which had increased for 14 consecutive months since April 2021, fell 1 percent for the year and 6.3 percent compared to June–the second consecutive monthly decline.
“Wavering consumer confidence and a pullback in spending, coupled with oversupply for some retailers, is driving prices down in major online categories like electronics and apparel,” said Patrick Brown, vice president of growth marketing and insights at Adobe. “It provides a bit of relief for consumers, as the cost of food continues to rise both online and in stores.”
The CPI report revealed that the gasoline index fell 7.7 percent in July and offset increases in the food and shelter indexes, resulting in the flat CPI. The energy index, important for business operations and transportation, fell 4.6 percent in July after rising 7.5 percent in June.
The gasoline index was down 7.7 percent over the month following an 11.2 percent increase in June. The index for natural gas declined in July after sharp recent increases, falling 3.6 percent. However, the electricity index increased 1.6 percent, its third consecutive monthly gain of at least 1.3 percent, BLS noted.
The energy index rose 32.9 percent over the past 12 months. The gasoline index increased 44 percent over the span and the fuel oil index rose 75.6 percent. The index for electricity was up 15.2 percent, the largest 12-month increase since February 2006. The index for natural gas increased 30.5 percent over the last 12 months.
The core index, minus food and energy, rose 0.3 percent in July, a smaller increase than in April, May or June. The indexes for shelter, medical care, motor vehicle insurance, household furnishings and operations, new vehicles and recreation were among those that increased over the month. There were some indexes that declined in July, including those for airline fares, used cars and trucks, communication and apparel, BLS noted.
The core index rose 5.9 percent over the last 12 months, with the energy index increasing 32.9 percent for the 12 months through July, a down from the 41.6 percent hike for the period ending June.