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Apparel Prices Crept Up in December, and Tariffs Might Explain Why

Likely feeling the effect of tariffs on imports from China, retail apparel prices increased 0.4 percent in December compared to November in what is normally a highly promotional environment, according to the Consumer Price Index (CPI) released Tuesday by the U.S. Bureau of Labor Statistics (BLS).

Prices on apparel for women, girls, boys, and infants and toddlers were all up, with men’s wear the only sector to see a decrease. Tariffs on apparel imported from China rose 15 percent on Sept. 1, and many companies said they would be able to limit the impact on prices, but they would need to increase them somewhat for the sake of profitability.

Raw materials have been working in favor of keeping prices down.  U.S. spot cotton prices averaged 65.48 cents per pound for the week ended Jan. 9. That was up from 64.74 cents the prior week, but down from 68.16 cents a year ago.

Women’s clothing prices were up 0.9 percent in the month, led by a 2.1 percent increase in dresses, a 2 percent rise in suits and separates, and a 0.7 percent hike in outerwear. Bucking the trend was the underwear, nightwear, swimwear and accessories group, with a decline of 1 percent.

Girls’ apparel prices rose 3.2 percent, while boys’ clothing cost 0.9 percent mors and infants’ and toddlers’ clothing prices inched up 0.4 percent.

Men’s wear prices fell 0.7 percent, led by a steep decline in suits, sport coats and outerwear of 6.5 percent, likely a victim of seasonal discounting. The cost of underwear, nightwear, swimwear and accessories was down 0.6 percent, while prices for shirts and sweaters rose 1.1 percent, and pants and shorts cost 0.4 percent more.

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Footwear prices dipped 0.1 percent in December, with a 1.8 percent drop for men’s and a 0.2 percent falloff for boys’ and girls. Women’s footwear prices were flat in the month.

The overall CPI rose 0.2 percent in December on a seasonally adjusted basis after rising 0.3 percent in November, BLS reported. Over the past 12 months, the all items index increased 2.3 percent before seasonal adjustment.

The so-called core index, minus food and energy, was up 0.1 percent in December after increasing 0.2 percent in November. In addition to apparel, the indexes for shelter, medical care, motor vehicle insurance, recreation, and new vehicles all increased in December. The indexes for used cars and trucks, household furnishings and operations, and airline fares were among those to decline.

The all items index increased 2.3 percent for the 12 months ending December, the largest 12-month increase since the period ending October 2018. The core also rose 2.3 percent for the year, the same increase as the periods ending October and November.

The energy index, important for business operations and logistics, increased 1.4 percent in December, its third consecutive monthly increase. The gasoline index rose 2.8 percent, while the electricity index declined 0.5 percent and the index for natural gas increased 0.3 percent in December, its third straight monthly increase.

The overall CPI rose 2.3 percent in 2019, BLS said. This was larger than the 2018 increase of 1.9 percent and the largest advance since the 3 percent rise in 2011. The index rose at a 1.8 percent average annual rate over the past 10 years.

The core index increased 2.3 percent over the past 12 months. The shelter index rose 3.2 percent over the 12-month span and the medical care index rose 4.6 percent. Apparel, down 1.2 percent, and used cars and trucks, off -0.7 percent, were among the few indexes to decline over the past year, BLS noted.