Inflation eased modestly in April — but price gains are still running at 40-year highs and spreading across the economy.
The Labor Department’s April reading of the Consumer Price Index rose 8.2 percent from a year ago, piling on after March’s 8.6 percent increase, which was the highest since Ronald Reagan was president.
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While COVID-19-induced supply chain backups, and energy costs in the wake of Russia’s invasion of Ukraine are key sources of higher prices, the impact is spreading. And although consumers are seen as relatively strong and supported by unemployment of just 3.6 percent and higher nominal wages, tradeoffs will increasingly have to be made.
Gasoline prices are up 43.6 percent year-over-year, while used cars and trucks are up 22.7 percent, food has increased 9.4 percent and shelter costs, which account for about 32.5 percent of total spending, are up 5.1 percent.
That leaves less money for apparel, where prices are up 5.4 percent.
Higher prices had become a kind of badge of honor in the historically promotional fashion industry, with players toward the upper end of the market — from Ralph Lauren to Chanel — telegraphing their brand power with bigger price tags.
Now costs are starting to catch up.
Others, like Walmart, pride themselves on their power to fight inflation, using their scale and influence to deliver discounts to consumers, and that has clearly helped keep prices below the broader rate of inflation in apparel.
The Federal Reserve itself began fighting inflation in earnest this year with two increases to its benchmark interest rate totaling a 0.75 percent bump up. But another percentage point of rate hikes are expected this year and many fear the Fed waited too long to cool down an economy that was mixed up by the pandemic and overheating.
There are signs of adjustment in consumer spending online, but the process is just beginning and no one is quite sure just how rough the ride down will be.
“As the cost of borrowing and economic uncertainty rises for consumers, we are beginning to see the early impact on both online inflation and spend,” said Patrick Brown, vice president of growth marketing and insights at Adobe. The web tracker found that online prices rose 2.9 percent from a year ago in April and were down 0.5 percent compared with March.
Apparel prices increased 12.3 percent year-over-year and slipped 1.7 percent compared with March.
Where Inflation Bites Hardest |
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With price gains across the economy running at 40-year highs, fashion is finding more competition for the consumer’s dollar. |
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|
April Year-over-year price change |
Share of Spending (CPI Relative importance) |
|
|
Fuel oil |
80.5% |
0.2% |
|
Gasoline |
43.6% |
4.6% |
|
Airline fares |
33.3% |
0.5% |
|
Used cars and trucks |
22.7% |
4.0% |
|
Meats, poultry, fish and eggs |
14.3% |
1.9% |
|
Men’s shirts and sweaters |
9.6% |
0.1% |
|
Food |
9.4% |
13.4% |
|
Women’s outerwear |
8.6% |
0.1% |
|
Transportation services |
8.5% |
5.7% |
|
All items |
8.3% |
100% |
|
Women’s dresses |
8.3% |
0.1% |
|
Men’s apparel |
8.0% |
0.5% |
|
Pets and pet products |
7.2% |
0.6% |
|
Men’s underwear, nightwear, swimwear and accessories |
6.8% |
0.2% |
|
Women’s footwear |
6.4% |
0.3% |
|
Apparel |
5.4% |
2.5% |
|
Women’s apparel |
5.3% |
0.8% |
|
Shelter |
5.1% |
32.5% |
|
Women’s suits and separates |
5.0% |
0.4% |
|
Women’s underwear, nightwear, swimwear and accessories |
4.1% |
0.3% |
|
Jewelry and watches |
0.3% |
0.2% |
|
Cosmetics, perfume, bath, nail preparations and implements |
-0.5% |
0.3% |
|
Televisions |
-5.8% |
0.1% |
|
Admission to sporting events |
-9.4% |
N/A |
|
Smartphones |
-16.1% |
N/A |
|
Source: U.S. Bureau of Labor Statistics, N/A = not available |
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