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We can expect higher apparel prices next year, according to Investors.Com. The supply/demand factor in raw cotton will be a key mover. Cotton futures hit a 140- year high earlier this month. Apparel manufacturers have yet to deal with the spike in prices. Many companies have not purchased their supply of cotton and are hoping that prices will come down. That may be wishful thinking. Analyst Tracy with FBR Capital said: "There is still an underlying supply and demand problem for cotton. Cotton should stay at elevated levels."The second big factor coming to bear on the apparel industry is the rising inflation in China. Labor costs have risen 20% to 25%. In addition, shipping costs are also higher.
The combination of these factors will change the price structure for apparel after nearly 20 years of steady prices. Producers will likely substitute other fibers, such as polyester and acrylic to minimize price increases.
The U.S. once had a thriving apparel industry before we shipped all our jobs to China and other underdeveloped countries. With labor costs rising 25% and shipping costs on the rise, perhaps it might be prudent for American manufacturers to bring production back home. It certainly would put a lot of people back to work.
A word to shoppers: Perhaps you might want to take inventory of your clothing needs for next spring and summer and make some purchases now before prices go up.
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