Jeans and Denim Clothing Price Hike

Don’t be surprised if you find higher price tags on jeans and cotton shirts hanging on retailer’s clothing racks this spring. Clothing prices have dropped for a decade as tame inflation and cheap overseas labor helped hold down costs. Retailers and clothing makers cut frills and experimented with fabric blends to cut prices during the recession.

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

Clothing prices are expected to rise about 10% in coming months, an analyst predicts, with the biggest increases coming in the second half of the year. Levi Strauss, Wrangler jeans maker VF Corp., and J.C. Penney, are all planning price increases.

More specifics on price increases are expected when clothing retailers such as J.C. Penney and Abercrombie & Fitch report financial results this month.
According to Eric Wiseman, CEO of VF Corp., 'All of VF Corp. brands, every single brand, will take some price increases'. Higher costs also will affect how clothes are made. Clothing makers are blending more synthetic fabrics like rayon and designing jeans with fewer beads and other embellishments. Shoppers also will have fewer color choices.

Retailers are trying to figure out whether consumer demand that gave them strong holiday sales will last. The fear is higher prices will nip that budding demand. Stores that cater to low- and middle-income shoppers will have the hardest time passing along price increases.

Cotton prices have jumped to a 150-year-high, rising to $1.90 per pound on Friday, more than double what they were a year ago, 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% to 50% of the cost of producing a garment. Labor ranges from 20% to 40%, depending on how complicated it is to make