From Deseret News archives:

Back to $chool

Published: Monday, Aug. 11, 2008 12:47 a.m. MDT
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Retailers also are having to make tough choices about raising prices because inflation in China is increasing U.S. costs on goods. A quarter of all the clothes sold in the United States — and 84 percent of shoes — are made in China.

China's producer price index, a measure of inflation, climbed 8.8 percent in June. That helped push U.S. costs on goods from China up 4.8 percent in June, the biggest year-over-year gain since the Labor Department started tracking the data in 2003.

Stores charging 8 percent to 9 percent more for some items are hoping to mask the inflated prices with well-promoted discounts and new merchandise, which is already priced higher, Flickinger said.

"It's a risky strategy, because people who are already buying less at full price will have even more sticker shock and be less inclined," Flickinger said. "This is simply a matter of survival."

In Utah, clothing costs rose 9.7 percent along the Wasatch Front between February and June, according to a consumer price index from Wells Fargo. Food prices, meanwhile, rose 2.7 percent in that time period. And gas prices rose 8 percent between May and June alone.

But the spending forecast might not be all clouds. Crude-oil costs are going down, and that should lower prices at the pump and buoy consumer spending confidence, said Kelly Matthews, economist at Wells Fargo in Salt Lake City.

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People also have their economic-stimulus checks, courtesy of the federal government. But analysts note that many consumers have already spent that money, before back-to-school shopping.

"All in all, you certainly have a mixed bag in terms of what parents will do," Matthews said. "My guess is that there's every reason to believe that the Utah environment for back-to-school spending would be less robust than it has been in years past, but relatively speaking, more robust than a comparable, national expectation might be."


Contributing: Associated Press; Bloomberg News.

E-mail: jtcook@desnews.com; nwarburton@desnews.com

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Image

Seven-year-old Isabel shows her mother, Suzanne Hales, a lunch bag she wants as she shops with siblings from left, Ken, 13, Margaret, 17, Stuart, 9, and her twin, Abigail, at the Target store in Midvale.

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