Rising Inflation ‘Not A Big Concern’ For These Sectors

Rising inflation costs have worried some, especially as it has affected consumer confidence. Still, while rising prices in nearly all sectors may be causing some concern, those in the apparel industry aren't as worried about how it may affect them.

While prices have increased throughout different sectors of the economy with the Labor Department revealing in the June consumer price index that prices jumped 0.9% overall from May, the apparel industry is welcoming an increase in prices, after the industry remained stagnant for a decade.

“This is not a big concern for apparel retailers,” Terry Lundgren, the former executive chairman and chief executive of Macy’s, said on Power Lunch. “You’re talking about a few dollars going up in price. It's not going to change the consumer’s mind in terms of purchasing.”

Apparel inflation hadn’t been a factor for 10 years, and, according to CNBC, prices rose 0.7% in June, coming off a 1.2% increase the month prior. Compared with a year ago, at the height of the coronavirus pandemic, prices were up 4.9%, something Lundgren referred to as “modest.” By comparison, vehicles jumped 10.5% in price, food increased 0.8% and energy has increased 1.5%.

Overall, the increase means that an apparel item that cost $20 last year would now be $0.98 higher in cost year to year. Besides being a small increase, Lundgren said that the retail industry is counting on pent-up demand to sustain the apparel market, and the time of year and demand for apparel at this usual point will likely lead to continued good news.

“Apparel is an event-driven activity,” he said. “If these events happening which we’re counting on for the fall season including back to school and including concerts and the like that’s really good news for apparel.”

His comments seem to be backed up by evidence of consumer spending habits after the Commerce Department revealed that retail sales unexpectedly rose 0.6% in June from May and 18% from a year prior. When it came to apparel, those numbers saw a 2.6% increase in June compared to May and a 47% increase from a year prior.

However, consumer confidence is also on a downturn due to inflation, with the consumer sentiment index hitting 80.8, its lowest number since February.