CPI numbers released this morning for apparel appear to be moving lock-step with the change in import prices.  Apparel CPI rang in at +4.17% vs. last year. Big number, but a deceleration from 4.65% in Jan. It's really a nit-pick to note that this is a 'slow down.' Though it is worth noting that the rate has stopped going up.

What is worth noting (chart 1) is that when looking at the underlying trend on a 2-yr basis, the CPI is rolling at a greater rate, while import prices are still headed up.

We know that this is backward looking, and that input cost compares get easy in 2H. But the problem is that everyone and their grandmother knows this too. Most companies are baking this into their models, and their guidance. Importantly, they are not accounting for what will happen to their plan if a competitors' plan fails. 

In other words, the consumer needs to continue to pay up for apparel. We need to continue to see low single digit yy CPI growth -- even though comps start to get extremely tough mid-summer.

Watch these Macro trends. They matter.

CPI: Cost vs Price Divergence - 3 16 2012 11 02 08 AM

CPI: Cost vs Price Divergence - 3 16 2012 11 01 01 AM

CPI: Cost vs Price Divergence - 3 16 2012 11 04 49 AM