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Retail Apparel Prices Fall in November Amid Holiday Sales

As holiday price-cutting sales set in, retail apparel prices fell a seasonally adjusted 0.9 percent in November following two months of price hikes, the U.S. Bureau of Labor Statistics (BLS) reported Wednesday.

Men’s and women’s clothing both saw declines last month in the promotional atmosphere, according to the Consumer Price Index (CPI) report. Men’s apparel prices were down 2 percent, led by a 4.1 drop in shirts and sweaters, as prices on pants and shorts dropped 2.7 percent, and the suits, sport coats and outerwear category fell 1.8 percent. Furnishings prices were flat when compared to October.

Women’s apparel prices were down 0.7 percent for the month, with mixed results depending on the category. Outerwear prices rose 2.5 percent, and the underwear, nightwear, sportswear and accessories group increased 0.8 percent. Prices for dresses declined 2.7 percent and suits and separates dipped 1.7 percent.

Boys’ apparel prices were up 1 percent last month, but girls’ clothing prices fell 1.7 percent. Infants’ and toddlers’ apparel prices fell 1.9 percent month to month.

While November is traditionally a difficult month to gauge apparel pricing power due to the aggressive holiday sales environment, it is somewhat reflective of relative stability of raw materials prices. In cotton, for example, prices peaked in the early summer at just above $1 a pound before falling back about 25 percent since then. Spot prices for U.S. cotton averaged 75.19 cents per pound for the week ended Dec. 6, which was up from 73.55 cents per pound a week earlier and from 71.04 cents a year earlier, according to the Department of Agriculture.

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The overall CPI was unchanged in November on a seasonally adjusted basis after rising 0.3 percent in October, BLS reported. Over the last 12 months, the CPI increased an unadjusted 2.2 percent. Core CPI, which excludes the volatile food and energy sectors, rose 0.2 percent in November.

In the energy sector, which effects operations costs for companies ranging from logistics suppliers to retailers, the gasoline index declined 4.2 percent in November, offsetting increases in an array of indexes including shelter and used cars and trucks. Other major energy component indexes were mixed, with the index for fuel oil falling, but the indexes for electricity and natural gas rising.

Ken Matheny, executive director of U.S. economics for Macroeconomic Advisers by IHS Markit, said, “Based upon today’s report, our estimate of the 12-month change in the core PCE (personal consumption expenditures) price index in November remains at 1.9 percent.”

With economists seeing the PCE index as a barometer for retail spending, Matheny added, “We made no revision to our forecast for fourth quarter real PCE growth, which left our fourth quarter GDP tracking at 2.1 percent.”