Retail apparel prices were up for the second consecutive month in July, inching up 0.4 percent from the previous month, with increases in both women’s and men’s clothing, the U.S. Bureau of Labor Statistics (BLS) reported in its Consumer Price Index (CPI).
The back-to-back gains were also seen in the overall CPI, which increased 0.3 percent for the month on a seasonally adjusted basis, after rising 0.1 percent in June, the BLS reported. Over the last 12 months, the CPI was up 1.8 percent before seasonal adjustment.
Prices for women’s apparel increased 1.3 percent last month, with gains in all categories. Prices for suits and dresses prices were up 2.4 percent, dresses rose 1.1 percent, outerwear rose 1 percent and the underwear, nightwear, swimwear and accessories group increased 0.5 percent.
Men’s apparel prices were up 1.1 percent in July month-to-month, but with wider swings by sector. Prices for suits, sport coats and outerwear jumped 4.7 percent, and shirts and sweaters rose 1.2 percent. At the same time, prices for the underwear, nightwear, swimwear and accessories group were down 0.8 percent, while pants and shorts fell 0.1 percent.
Boys’ apparel prices rose 1.1 percent, but girls’ clothing cost 0.8 percent less at retail and infants’ and toddlers’ prices declined 1.1 percent.
The overall increases could be attributable to the flux in apparel sourcing brought on by the U.S.-China trade war. While actual punitive tariffs haven’t been imposed on clothing yet, the mere threat of them has caused companies to shift their sourcing strategies.
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Some of that production for U.S. brands has gone to low-cost Asian suppliers, and some has gone to Western Hemisphere countries where prices are slightly higher. Julia Hughes, president of the U.S. Fashion Industry Association (USFIA), said as sourcing shifts out of China, the countries that are picking up increased production are raising prices to meet demand.
In delaying 10 percent tariffs on some apparel set to go into effect on Sept 1, President Trump told reporters Tuesday, “We’re doing this for the Christmas season. Just in case some of the tariffs would have an impact on U.S. customers.” The president may have had an “uh-oh” moment when he saw inflation moving up and considered that it might stop the Fed from cutting rates.
“That’s also why he wants to push off tariffs until the holidays. By then goods already have been shipped at the lower prices ahead of newer tariffs,” Elazar Advisors said in a report.
Possible staving off even higher price tags, was the slump in cotton prices that have dropped to cyclical lows. U.S. spot cotton prices averaged 53.47 cents per pound for the week ended Aug. 8, according to the U.S. Department of Agriculture (USDA). That was down from 57.75 cents the prior week and from 84.26 cents reported the corresponding period a year ago, USDA said.
Footwear prices were flat in July, as declines of 0.4 percent in men’s and women’s were counterbalanced by a 2.8 percent increase in prices for boys’ and girl’s footwear. This is likely driven by back-to-school selling.
BLS said increases in the indexes for gasoline and shelter were the major factors in the overall CPI gain. The energy index, an important indicator for business operations and logistics, rose in July as the gasoline and electricity indexes increased, though the natural gas index declined.
The core CPI, minus food and energy, also rose 0.3 in July, the same increase as in June. The July rise was broad-based, with increases in the indexes for shelter, medical care, airline fares, household furnishings and operations, apparel and personal care all contributing, according to BLS.
The overall CPI was up 1.8 percent for the 12 months, a larger increase than the 1.6 percent rise for the period through June. The core CPI rose 2.2 percent over the last 12 months.