Clothing prices are forecast to climb by up to 14% in the second half of this year this year.
Prices for spring 11 are already 8% up on last year but a further increase is likely, broker UBS believes.
The broker said: “Cotton prices have reached fever pitch on the back of weather related disruption in Australia and our clothing price inflation model suggests input cost inflation of around 18% in the second half of 2011 from our previous 14% assumption.
“Assuming some additional mitigating actions from suppliers this implies second half prices are likely to be up 14% including the UK VAT increase.”
UBS said the magnitude of retailers’ increased input costs “may encourage furher price mitigation through product reengineering, substitution to man-made fibres and moving to lower cost producton.”