Retail apparel prices fell 0.6% in March after rising in the first two months of the year, with declines in women’s and men’s prices, the U.S. Bureau of Labor Statistics (BLS) reported Wednesday in its Consumer Price Index.
The lower prices do follow a longer-term deflationary pattern for apparel prices, but also could be an indication of stores trying to lure shoppers with lower-priced merchandise in a generally soft retail environment.
The apparel CPI decline was also in line with the overall CPI, which decreased 0.1% in March on a seasonally adjusted basis after rising 0.2% in February. The all items index rose 2.4% from a year earlier–the largest 12-month increase since the period ending March 2017 and higher than the 1.6% average annual rate over the past 10 years, BLS noted. Apparel prices were 0.3% higher than a year ago on a non-adjusted basis.
The core index, minus the volatile food and energy sectors, rose 0.2% in March, matching February’s increase, the BLS said. Economists noted this as a sign of inflation brought on by a weak dollar and increased government spending that will likely lead to interest rate hikes.
“The details in this report were broadly consistent with our estimates, implying no revision to our estimate that personal consumption expenditures rose at a 1.1% annual rate in the first quarter,” Ken Matheny, executive director of U.S. economics at Macroeconomic Advisers by IHS Markit, said.
Noting the swing in apparel prices, Matheny said, “Contributing to the increase in the core CPI in March were large price increases for hospital services and airline fares.”
In apparel, women’s wear prices fell 2.5% last month, led by declines of 4 percent in suits and separates; 2.5% in the underwear, nightwear, sportswear and accessories group; 1.7% in dresses and 0.9% in outerwear.
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Men’s wear prices declined 1 percent, with decreases of 2.7% in shirts and sweaters, 2.5% in suits, sport coats and outerwear, and 2.1% in pants and shorts. Furnishings was the only category with an increase in prices, rising 1.2% in the month.
Boys’ apparel prices fell 1.2%, while girls’ apparel prices were up 0.3% in the month.
Retail footwear prices increased 1.2% in March, with women’s footwear prices up 0.8%, men’s rising 2.1% and boys’ and girls’ increasing 2.8%.
In the overall economy, a decline in the gasoline index more than outweighed increases in the indexes for shelter, medical care and food to result in the slight seasonally adjusted decline in the all items index, the BLS said.
The energy index fell sharply due mainly to a 4.9% decrease in the gasoline index. The index for food rose 0.1 percent over the month, with the indexes for food at home and food away from home both increasing. The energy index increased 7 percent over the past 12 months and the food index advanced 1.3%, cutting into discretionary spending on areas like clothing and footwear.
Along with shelter and medical care, the indexes for personal care, motor vehicle insurance and airline fares all rose. The apparel index decline was joined by decreases in communication, and used cars and trucks.
Matheny said based on the report, IHS Markit left its first quarter gross domestic product (GDP) tracking at 1.6% and second quarter GDP tracking at 3 percent.