With overall inflation hitting a 40-year high in February with the rate reaching 7.9 percent, retail apparel prices joined in the trend with a seasonally adjusted 0.7 percent increase compared to the prior month and an unadjusted jump of 6.6 percent from a year earlier, the Consumer Price Index (CPI) report from the U.S. Bureau of Labor Statistics (BLS) revealed Thursday. Adobe also took a look a what’s happening with prices online.
Women’s apparel prices rose 1.5 percent in February, led by increases of 3.8 percent in the underwear, nightwear, swimwear and accessories group, and 1.3 percent in suits and separates. Conversely, prices fell 1.6 percent for outerwear and 0.8 percent for dresses.
In men’s wear, prices rose 1 percent in February, with increases of 2.5 percent in pants and shorts; 2.4 percent in the underwear, nightwear, swimwear and accessories group, and 0.8 percent in shirts and sweaters. Bucking the trend were prices of suits, sport coats and outerwear, down 1.7 percent.
Boys’ apparel prices were up 1 percent for the month, infants’ and toddlers’ prices grew 2.1 percent and girls’ clothing prices were flat.
Retail footwear prices rose 1.3 percent last month, as boys’ and girls’ shoes cost 2.5 percent more, men’s rose 1 percent and women’s footwear inched up 0.3 percent.
Prices for household furnishings and supplies increased 0.8 percent for the month and 10.3 percent over the year. Within that category, retail prices for furniture and bedding rose 0.1 percent last month and 17.1 percent from February 2021.
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The Adobe Digital Price Index (DPI) for February showed online prices increased 3.6 percent year-over-year and 0.1 percent month-over-month. This is a new record high, after the previous record in November, when prices rose 3.5 percent year over year and marks the 21st consecutive month of year-over-year online inflation.
In February, tools and home improvement were a standout category, with prices seeing their highest annual increase at 7.8 percent from the previous year. Apparel prices increased 16.7 percent for the 12 months and were up 0.3 percent from January, more than any other category.
On top of general inflation impacting the economy, the soft goods industry is battling upward pressure from higher raw material and logistics costs. U.S. spot cotton prices averaged $1.18 per pound for the week ended March 3, 2022, according to the U.S. Department of Agriculture. The weekly average was down about $1 from the previous week, but up from 84.50 cents a pound a year earlier.
The Producer Price Index for U.S.-made synthetic fibers was up 0.1 percent in January and 17.7 percent from a year earlier. Prices for yarns and thread rose 2.1 percent for the month and 29.3 percent for the year, while prices for fabrics increased 1.3 percent in the month and 14.6 percent from January 2021.
With most goods imported by ocean freight, Drewry’s composite World Container Index (WCI) decreased 1.1 percent to $9,179.98 per 40-foot container or equivalent unit (FEU) for the week through Thursday, but remained 83 percent higher than a year ago. The WCI, assessed by Drewry for the year-to-date, was $9,412 per FEU, $6,312 higher than the five-year average of $3,101 per FEU.
In the overall economy, the CPI increased a seasonally adjusted 0.8 percent in February after rising 0.6 percent in January, BLS reported. Over the last 12 months, CPI increased an unadjusted 7.9 percent. The 12-month increase has been steadily rising and is now the largest since the period ending January 1982, BLS said.
Increases in the indexes for gasoline, shelter and food were the largest contributors to the surge. The gasoline index rose 6.6 percent in February and accounted for almost one-third of the CPI increase.
The core index, minus food and energy, rose 0.5 percent in February following a 0.6 percent increase the prior month. The shelter index was by far the biggest factor in the increase, BLS noted, with a broad set of indexes also contributing, including those for recreation, household furnishings and operations, motor vehicle insurance, personal care, and airline fares.
Over the past year, the core index rose 6.4 percent, the largest 12-month change since the period ending August 1982. The energy index jumped 25.6 percent over the past year and the food index increased 7.9 percent, the largest 12-month increase since the period ending July 1981.
The energy index, important for business operations and logistics, rose 3.5 percent in February following a 0.9 percent increase in January. The gasoline index rose sharply in February, increasing 6.6 percent, the index for natural gas increased 1.5 percent in February, and the electricity index, which rose sharply in January, declined 1.1 percent in February.
The energy index was up 25.6 percent over the past 12 months with all major energy component indexes increasing.
President Biden said the CPI report offers “a reminder that Americans‘ budgets are being stretched by price increases and families are starting to feel the impacts of Putin’s price hike.”
“A large contributor to inflation this month was an increase in gas and energy prices, as markets reacted to Putin’s aggressive actions,” Biden said. “As I have said from the start, there will be costs at home as we impose crippling sanctions in response to Putin’s unprovoked war, but Americans can know this: the costs we are imposing on Putin and his cronies are far more devastating than the costs we are facing.”
National Retail Federation chief economist Jack Kleinhenz said inflation isn’t necessarily hitting all consumers as hard as top-line numbers might suggest. However, consumer concerns about rising prices could become self-fulfilling prophecies if workers demand higher wages to compensate.
“After decades of relatively low levels, inflation is on everyone’s mind and has been making consumers and businesses miserable as prices have picked up dramatically over the past year,” Kleinhenz said. “While actual price gains are expected to slow down in the coming months as they lap relatively high readings from the year before…[i]f consumers expect rampant inflation to continue, the possibility of a wage-price spiral could be unleashed as they demand to be paid more.”
Headline inflation numbers may mask what different consumers are really facing, since spending patterns vary widely and lead to significantly different inflation experiences, Kleinhenz added.
“What a person buys can have a tremendous effect on how severely the pain of inflation is felt,” he said.
Matt Pavich, senior director of retail innovation at Revionics, described the CPI report of higher prices as “no surprise at this point, but it doesn’t make it any easier on retailers tasked with accounting for thinning margins and extremely price-conscious shoppers.”
“Maintaining consumer satisfaction with fair prices while still turning a profit in times like these isn’t easy, but it’s doable,” Pavich said. “Of course, what consumers perceive as fair varies by channel, location, item-type and more, so deciding on those fair prices gets extremely complicated for retailers that don’t have access to sophisticated pricing algorithms.”