Clothing Prices To Rise 10% In Spring – Thank Goodness There Is No Inflation

Due to this, that, and the other, clothing prices are expected to rise by 10% in the spring:

Cotton has more than doubled in price over the past year, hitting all-time highs. The price of other synthetic fabrics has jumped roughly 50 percent as demand for alternatives and blends has risen.

Clothing prices are expected to rise about 10 percent in coming months, with the biggest increases coming in the second half of the year, said Burt Flickinger III president of Strategic Resource Group.

Clothing prices (fabric prices really) should have risen a long time ago, but to keep costs down, clothing-makers have blended more synthetic fabrics like rayon into their products. Now that even synthetic fabrics have jumped, there’s no where else to go to cut costs, or to keep costs the same.

Cotton prices have jumped to a 150-year-high, rising to $1.90 per pound on Friday, more than double what it was a year ago and just ahead of the $1.89 record hit during the Civil War, according to the International Cotton Advisory Committee.

Cotton prices began soaring in August of 2010 after bad weather cut harvests in major producing countries including China, the U.S., Pakistan and Australia.

Restrictions on exports from India, the world’s second-largest cotton exporter behind China, have also produced cotton shortages. On top of that, worldwide demand for cotton has risen as the global economy improves.

Raw materials account for 25 percent to 50 percent of the cost of producing a garment. Labor ranges from 20 percent to 40 percent, depending on how complicated it is to make, Bassuk said.

On the production side, many Chinese factories that shut down temporarily in the depths of the recession still haven’t returned to capacity. As they ramp up, they’re finding they have to pay workers more because of labor shortages, said John Long, retail strategist at consulting firm Kurt Salmon.

So there are quite a few factors in play then. Bad weather cut harvests, which in turn caused cotton prices to jump. Next we have an increase in worldwide demand for cotton. That demand isn’t coming out of the west, it’s coming nearly exclusively from China. IN China, farmers have been hoarding their own cotton in order to drive up the price. Higher fertilizer and labour costs – up 20% in the last year alone – are making it difficult for Chinese farmers to break even let alone make a profit, therefore, they’re trying the hoarding route.

Also, Chinese imports in 2010 doubled from 2009.

The article mentions that clothing prices will be affected because of the high cotton and synthetic fiber costs, but think for a minute what other products use cotton and synthetic fibers? Roh roh, it’s not only clothing that is going to be affected. Furniture, towels, gunpowder, coffee filters, there’s even a slew of cosmetic and medical uses. And I’ve only touched on a few.

Couple all that with rising Chinese labour costs and ya, it’s not hard to see a 10% increase coming.

Having said all that, cotton prices could mellow out if the Chinese would stop hoarding the crap and put their cotton back on the market. Which they will when they get the price they’re looking for. Then, there will be a glut of cotton, causing prices to fall. Possibly. Maybe.

Finally, when you think about how much it costs to ship a container from China to our shores, and then add the rising Chinese labour costs, and then factor in the crazy taxes both from exporting Chinese goods and importing Chinese goods to the land of the round-eye, it’s getting to the point where it’s really not that much more expensive to make a lot of goods right here in North America. I know, we’re not there yet, but as the standard of living rises in China and our wages become stagnant here in the west, things will start to pull closer together.

Strange when you think about it, but Chinese prosperity could be the death of Chinese prosperity.

2 Responses to “Clothing Prices To Rise 10% In Spring – Thank Goodness There Is No Inflation”

  1. marc in calgary™ Says:

    Is cotton used to manufacture gunpowder?

  2. Steynian 438 « Free Canuckistan! Says:

    [...] Fast Food; Another Point of View; The Top 10 Financial Links Of The Day 2; Clothing Prices To Rise 10% In Spring; Your Life According To The Government; The Top Ten Financial Links Of The Day 3; MENSA Teaser [...]

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