Rise in U.S. auto prices baffles analysts, revisions seen

WASHINGTON (Reuters) - The reported rise in new U.S. vehicle and apparel prices during the past two months was out of sync with the economic situation and was distorting consumer inflation figures, analysts said on Wednesday.

The Labor Department said on Wednesday prices for new vehicles increased 0.8 percent in February after rising 0.3 percent the prior month. Apparel prices jumped 1.3 percent after a 0.3 percent gain in January.

Those increases contributed to the core Consumer Price Index rising by 0.2 percent in February after climbing by the same margin in January.

Analysts said these figures were likely to be revised lower to reflect the loss of pricing power in an economy that is reeling from a recession now in its 15th month.

"None of these increases gel particularly well with the current economic situation," said Harm Bandholz, an economist at Unicredit Markets and Investment Banking.

Retailers across the board are resorting to deep price discounts to attract buyers amid a slump in demand that is being worsened by escalating unemployment.

"The increase in auto prices almost defies a rational explanation. I just don't see anything out there which acts as a catalyst for a rise in the price of automobiles," said Joseph Brusuelas, an economist at Moody's Economy.com in West Chester, Pennsylvania.

"We will see that particular number revised going forward. How did prices for sweaters and automobiles go up when we can observe significant discounting across both the apparel and auto sector?"

U.S. auto sales dropped to 9.3 million units on an annualized basis in January and February, the lowest level since 1982.

But speculation is rife that lower gas prices may have encouraged U.S. consumers to buy relatively more pickup trucks and SUVs, so-called light trucks that tend to carry higher prices than passenger cars.

According to industry data, the light truck sales mix was 52.5 percent in January. It ticked slightly higher to 52.8 percent in February.

However, analysts are unconvinced, citing the drop in overall volumes of auto sales and argue the rise in light truck sales mix was insignificant.

(Additional reporting by Kevin Krolicki in Detroit)

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)