Inflation’s up 8.6 percent over the past year, the largest 12-month increase since the period ending December 1981, the U.S. Bureau of Labor Statistics (BLS) reported Friday.
With inflation pressures at play, retail apparel prices increased a seasonally adjusted 0.7 percent in May, as all categories of clothing costing more, according to the BLS’ Consumer Price Index (CPI) published Friday
Women’s wear prices rose 0.7 percent for the month, led by a 2.2 percent hike in dresses and a 2 percent rise in outerwear, along with a 0.6 percent gain in the underwear, nightwear, swimwear and accessories group. Suits and separates bucked the trend with a 0.6 percent decline.
Men’s wear prices were up 0.2 percent in April, as increases of 1.8 percent in shirts and sweaters; 1.5 percent in suits, sport coats and outerwear, and 0.2 percent in the underwear, nightwear, swimwear and accessories group were somewhat countered by a 1.2 percent decrease in pants and shorts pieces.
Apparel prices rose 0.9 percent for girls and 0.2 percent for boys and 2 percent for infants and toddlers in May.
Footwear cost 0.9 percent more at retail last month, with increases of 3.2 percent for boys’ and girls’ shoes, 0.5 percent for women’s and 0.4 percent for men’s.
In home goods, prices for household furnishings and supplies inched up 0.1 percent in the month. Within that category, the cost of furniture and bedding ticked down 0.2 percent.
The soft goods sector like most others have been impacted by rising costs of freight and logistics, and the raw materials to make them during the current inflationary cycle.
U.S. spot cotton prices averaged $1.33 per pound for the week ended June 2, down from $1,37 the prior week, but up from 79.41 cents a year earlier, according to the U.S. Department of Agriculture. The BLS Producer Price Index for April showed prices for U.S.-made synthetic fibers were up 2.1 percent, while prices for processed yarns and threads rose 6.2 percent and the cost of finished fabrics increased 1.5 percent.
What’s happening with prices online
Meanwhile, the Adobe Digital Price Index (DPI) released Thursday showed online retail prices increased 2 percent year over year—down from the 2.9 percent annual jump in April and the record 3.6 percent year-over-year increase in March. On a month-over-month basis, e-commerce retail prices decreased 0.7 percent.
Online apparel prices were up 9 percent year over year in May, and down 1.5 percent from April totals. While the category has now seen 14 months of online inflation, Adobe data indicates that prices are beginning to level out. Starting in February, when the average apparel product was 16.7 percent higher than the year prior, prices have dipped in consecutive months. In March, apparel prices were 16.3 percent higher year over year. Prices contracted further in April, at 12.3 percent more than the year-prior.
Across all categories, inflation has impacted online retail for two full years as of May. But in another sign of good news, May is the second month in that stretch where online price increases have slowed.
The majority of categories tracked by the DPI (10 out of 18) saw month-over-month price decreases in May. Price drops were observed across electronics, personal care products, jewelry, books, toys, home/garden, appliances, computers, sporting goods and apparel.
On a year-over-year basis, 12 of the 18 categories tracked by the DPI still saw their prices jump, with groceries rising the most. Price drops were observed in six categories: electronics, jewelry, books, toys, computers and sporting goods.
May 2022 is the first month since Adobe launched the DPI in March 2016 where prices for groceries have risen the most of any category, overtaking apparel. Groceries rose 11.7 percent annually—a record high for the sector—and ticked up 1.3 percent on a monthly basis. This follows a 10.3 percent year-over-year increase in April, a 9 percent annual increase in March and a 7.6 percent jump in February over the year-ago period—all record highs.
Adobe’s DPI, which analyzes 1 trillion visits to retail sites and more than 100 million SKUs across, indicated that consumers could be showing concern, as some predicted, about their future discretionary spending.
“E-commerce data has become an important input for measuring inflation as daily activities, including shopping, become more and more digital,” said economist Marshall Reinsdorf, former senior economist at the International Monetary Fund. “In an uncertain economic environment, Adobe’s Digital Price Index is a timely indicator that often mirrors inflation movements happening offline while highlighting the tendency for inflation to be lower in the digital economy.”
In May, consumers spent $78.8 billion online, which represents 7.1 percent growth over the year-ago period. The spending total increased $1 billion from April, when consumers spent $77.8 billion online, representing 4.5 percent year-over-year growth. But the total is below the $83.1 billion that was spent in March, when annual spending jumped 7 percent annually.
“Despite the modest increase in consumer spending online, an uncertain economic climate and rising costs in core areas like groceries are putting a hamper on overall demand,” said Patrick Brown, vice president of growth marketing and insights, Adobe. “Slower consumer spending on discretionary items has driven slower, single digit e-commerce growth since March, and this pullback mirrors the easing in online inflation.”
Meanwhile, the overall CPI increased 1 percent in May on a seasonally adjusted basis after rising 0.3 percent in April, BLS reported. Over the last 12 months, CPI rose an unadjusted 8.6 percent, an historically high figure not seen in roughly four decades.
The increase was broad-based, with the indexes for shelter, gasoline and food being the largest contributors, BLS noted. After declining in April, the energy index–important for business operations–rose 3.9 percent over the month, with the gasoline index rising 4.1 percent. The energy index was up 34.6 percent over the last year, the largest 12-month increase since the period ending September 2005.
The core index, minus food and energy, rose 0.6 percent in May, the same increase as in April. While almost all major components increased over the month, the largest contributors were the indexes for shelter, airline fares, used cars and trucks, and new vehicles. The indexes for medical care, household furnishings and operations, recreation and apparel also increased in May.