WASHINGTON — Retail prices on women’s apparel fell a seasonally adjusted 0.4 percent last month, compared with October — the first November drop since 2003, according to the Labor Department’s Consumer Price Index.
“There were more items on sale, and the sale prices were at a bigger discount than during the last couple of Novembers,” said Jessica Penvose, an economist at the Bureau of Labor Statistics.
The December price climate may depend on the strength of holiday sales as retailers seek to lure shoppers with markdowns and bigger promotions.
“Discounts, discounts, discounts. The consumer has come to expect that, as the season wears on, the discounts will get deeper,” Marshal Cohen, NPD Group’s chief industry analyst, said in a statement on the research firm’s holiday mid-point consumer survey. “In fact, 79 percent of respondents tell us that they expect to make their purchases on sale.”
Though prices have inched up some, 0.3 percent so far this year, downward pressure has been the trend for some time. Against a year earlier, women’s apparel prices in November slid 0.2 percent and declined 4 percent from five years earlier.
Price deflation is generally seen as a by-product of stiff competition for consumers’ dollars and imports from low-wage countries. These forces have reordered the industry in recent years, even as lower prices have made it difficult to boost already slim profit margins at stores.
Prices on suits and separates, which make up 53 percent of the women’s index, fell 1.7 percent during November and were down 1 percent compared with a year earlier. Prices on women’s underwear, nightwear, activewear and accessories rose 0.2 percent for month but were down 1.8 percent year-over-year.
Overall, prices on all goods and services were flat in November after two consecutive months of 0.5 percent decreases.
Economists took heart from the data, especially since rising prices were a major concern a few months ago.
Until this summer, the Federal Reserve had raised the benchmark federal funds interest rate 17 consecutive times, leaving it at 5.25 percent in June, in an effort to tamp down inflation.
“When the Fed stopped tightening, the market started doing better, they started seeing better trends on inflation, energy prices settled down and, in a sense, this news today just validates the market view, which is [that] interest rates don’t need to be as high as we thought,” said J.P. Morgan Chase & Co. economist James Glassman.