Retail apparel prices rose a seasonally adjusted 1.2 percent in May from the previous month and were up an unadjusted 5.6 percent from a year earlier, the Bureau of Labor Statistics (BLS) reported Thursday in the Consumer Price Index (CPI).
May prices were pushed up by increases of 1.5 percent in women’s, 5.2 percent in girls’ and 0.9 percent in infants’ and toddlers’, while men’s wear prices dipped 0.2 percent and boys’ rose 0.7 percent.
Within women’s wear, price increases of 3.6 percent in outerwear, 1.1 percent in dresses and 1 percent in suits and separates were seen, while the underwear, nightwear, swimwear and accessories group saw prices decline 0.7 percent.
In men’s, a statistical anomaly in the monthly comparisons resulted in prices rising in every category even though the overall sector saw a slight drop. Suits, sport coats and outerwear were up 1.5 percent month to month; the underwear, nightwear, swimwear and accessories group rose 0.9 percent; pants and shorts increased 0.7 percent, and shirts and sweaters inched ahead 0.1 percent.
Retail footwear prices rose a seasonally adjusted 1.4 percent, with gains of 3.5 percent in boys’ and girls’, 1.6 percent in women’s and 0.1 percent in men’s.
Some of the higher cost of clothes begins at the raw material end of the supply chain. U.S. spot cotton prices averaged 79.41 cents per pound for the week ended June 3, up from 78.50 cents the prior week and from 55.22 cents a year earlier, according to the U.S. Department of Agriculture.
There’s also concern about an inflationary trend in the U.S. economy. The overall CPI increased 0.6 percent in May on a seasonally adjusted basis after rising 0.8 percent in April, BLS reported. Over the last 12 months, the CPI increased an unadjusted 5 percent, the largest yearly increase since a 5.4 percent increase for the period ending August 2008.
Nariman Behravesh, senior economic advisor at IHS Markit, said the U.S. economy will be one of a handful worldwide to close the output gap rapidly in 2021 and 2022. For this year, Behravesh forecast real gross domestic product (GDP) growth at 6.7 percent, the most rapid in the developed world.
“The intensity of the U.S. debate about inflation points to the considerable uncertainty around estimates of potential GDP and its key components–productivity and the labor force,” he said. “The civilian labor force participation rate has been declining gradually for the past two decades from around 67 percent in 2001 to a little over 63 percent right before the pandemic. It then plunged to nearly 60 percent in the spring of 2020 but has since recovered–it reached 61.7 percent in April.”
Behravesh said while in April the official unemployment rate was 6.1 percent, one alternative measure, favored by Fed chair Jerome Powell, suggests that the unemployment rate was around 9 percent.
“All this implies that the U.S. economy probably has ‘more room to run’ and that the continued recovery in the labor force participation rate will help to keep inflationary pressures in check,” he added. “IHS Markit analysts expect that temporary pressures will push U.S. core inflation significantly above 2 percent in 2021, after which inflation will subside to near 2 percent.”
The so-called core index, minus the volatile food and energy sectors, rose 0.7 percent in May after increasing 0.9 percent in April. Many of the same indexes continued to increase, including used cars and trucks, household furnishings and operations, new vehicles, airline fares and apparel.
The core index rose 3.8 percent over the last year, the largest 12-month increase since the period ending June 1992. The energy index, a key indicator for business operations, was unchanged in May after declining slightly in April. As in April, the gasoline index fell, while other energy component indexes increased.
Over the 12 months through May, the energy index rose 28.5 percent, with the gasoline index was up 56.2 percent since May 2020, when it was at its lowest level since February 2016. The May 2021 increase was the largest 12-month hike since the period ending April 1980. The index for electricity increased 4.2 percent over the last year, while the index for natural gas rose 13.5 percent.