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Retail Apparel Prices Drop in October as Supply Chain Issues Converge

As promotional fourth quarter selling kicked in, retail apparel prices fell a seasonally adjusted 1.8 percent in October compared to the previous month, with declines across categories, the U.S. Bureau of Labor Statistics (BLS) reported Wednesday in the Consumer Price Index (CPI).

This followed a 0.4 percent decline in retail apparel prices September, after a 0.2 percent increase in August. Apparel prices were also down an unadjusted 2.3 percent from October 2018, reflecting the cycle of soft fiber and fabric prices in the last year and likely before merchandise that was subject to fresh tariffs hit the pipeline.

U.S. spot cotton averaged 61.09 cents per pound for the week ended Nov. 7, down from 62.05 cents last week and from 74.83 cents a year earlier, according to the Department of Agriculture. The Producer Price Index for synthetic fibers was down 0.4 percent in September for the month and the year, according to the U.S. Bureau of Labor Statistics.

“Weakness in domestic markets has led to a drop in [fiber] prices during the third and fourth quarters, much more than the raw materials would indicate for most of the fiber types,” Laura Murphy, research director for PCI Fibers/Wood Mackenzie Chemicals, said. “Initial indications for 2020 show continued weakness many of the fiber types, and prices continue to erode.”

However, coming months could see prices inflated from tariffs and concurrent price increase strategies from brands trying to remain profitable.

Women’s apparel prices were down 3.3 percent in October, with declines of 5.7 percent for suits and separates, 1.2 percent for outerwear and 0.6 percent in the underwear, nightwear, swimwear and accessories group. Dresses bucked the trend, with prices up 1.9 percent.

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Men’s apparel cost 1.1 percent less to purchase in October, with declines in every category. Prices fell 2.7 percent for shirts and sweaters; 1.1 percent for pants and shorts; 0.4 percent for suits, sport coats and outerwear, and 1.3 percent for the underwear, nightwear, swimwear and accessories group.

Girls’ apparel prices fell 2.9 percent in the month and boys’ were down 3.9 percent, while the cost of infants’ and toddlers’ clothes decreased 1.9 percent.

Retail footwear prices were down 0.5 percent for the month. Women’s footwear cost 0.9 percent less, and men’s fell 0.6 percent, while boys’ and girls’ shoe prices were up 0.4 percent.

The overall CPI rose 0.4 percent in October on a seasonally adjusted basis after going unchanged in September, BLS reported. Over the past year, the CPI increased a non-adjusted 1.8 percent, a slightly larger rise than the 1.7-percent increase for the period ending September.

The core CPI, excluding the volatile food and energy sectors, increased 0.2 percent in October. The core index rose 2.3 percent over the past 12 months.

Indexes for medical care, recreation, used cars and trucks, shelter and personal care all rose in October, though the increase in the shelter index was the smallest since October 2013. In addition to apparel, indexes for household furnishings and operations, new vehicles and airline fares all declined.

The energy index, important for business operations and logistics, increased 2.7 percent in October after recent monthly declines, and accounted for more than half of the increase in the CPI, while increases in the indexes for medical care, recreation and food also contributed.

The energy index declined 4.2 percent over the past 12 months. The gasoline index fell 7.3 percent and the fuel oil index decreased 10.6 percent over the year. In contrast, the index for electricity rose 0.4 percent and the index for natural gas advanced 0.2 percent.