Retail Apparel Prices Fell in December and 2017, as Overall CPI Rose

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The deflationary trend in apparel and footwear prices continued in 2017.

Retail apparel prices fell 0.5% in December from a month earlier, the fourth consecutive monthly decline, while footwear prices also dipped, the Bureau of Labor Statistics reported in its monthly Consumer Price Index.

Women’s apparel and retail apparel prices declined a seasonally adjusted 0.6%, with a notable 5.3% decrease in outerwear prices during the typically promotional month of December; a 1.1% decline in suits and separates; and a 1.4% falloff in the broad underwear, nightwear, sportswear and accessories category. Dresses saw the only increase with a 2.1% rise. Girls’ apparel prices rose 2 percent month-to-month.

Men’s apparel prices were down 0.4% for the month, with furnishings prices up 1.9% and the suits, sport coats and outerwear group increasing 2 percent, while shirts and sweaters fell 2.3% and pants and shorts prices dropped 2.2%. Boys’ apparel prices were flat for the month.

Footwear prices stepped down 0.4% month-to-month, led by a 3.6% decline in men’s.

[Read more about industry prices: Cotton Production Seen Growing, Prices Seen Rising]

For the year, overall apparel prices were down 1.6%, as women’s prices dropped 3.1%, men’s fell 0.3% and footwear fell 2.6%. Fashion retailers have been in a long-term cycle of soft pricing power led by a promotional atmosphere cutting into profit margins.

Overall consumer prices rose 0.1% in December, while core prices, which exclude the volatile food and energy sectors, rose 0.3%, the largest rise since January 2017. For all of 2017, the overall CPI rose 2.1%, with the core index increasing 1.8%.

Ken Matheny, executive director for U.S. economics for Macroeconomic Advisers by IHS Markit, said during December there were large increases in prices for new vehicles, used cars and trucks, and prescription drugs. Airline fares dropped for a second month, declining 0.5% in December after a 2.4% decrease in November.

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“Today’s report implies more real spending in December and the fourth quarter than we previously estimated,” said Matheny, who also took into account a strong retail sales report on Friday. “As a result, we raised our tracking estimate of fourth-quarter personal spending growth by one-tenth to 3.8%. We did not change our forecast of first-quarter Personal Consumption Expenditures growth.”

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