WASHINGTON – Retail apparel prices plunged 1.2 percent in July – the biggest decline in nearly eight years – driving a slowdown in the core inflation rate and elevating investors’ confidence that the Federal Reserve will not increase interest rates in the near future.
The Consumer Price Index, a closely watched inflation gauge at the retail level, increased 0.4 percent in July, slightly higher than a 0.2 percent increase in June.
But, stripping out volatile food and energy prices, the “core” inflation rate rose just 0.2 percent in July, after rising 0.3 percent the past four months.
Following a report Tuesday, which showed a decline in core wholesale prices, economists said all signs point to an abatement in inflationary pressures. That was good news for merchants fearing that higher prices on consumer goods, coupled with soaring gas prices, could hit consumer spending and adversely impact their bottom lines.
For complete coverage, see tomorrow’s issue of WWD.