Fashion retailers are anxiously watching the price of cotton following a 16% surge in the first three months of 2013.
PwC international trade adviser Emma Ormond said that the increase is likely to have an impact on retailers’ pricing strategies. She said: “With so much squeezed out of the supply chain already, price increases are inevitable.”
The cotton price is 90 cents per pound at present, lower than the $1.07 high of May 2011. However, one big retailer said that the recent jump was already having an impact.
Some retailers including value fashion giant Primark absorbed the cotton price hikes in 2010 to 2011 to keep prices low. It suffered an 8% decline in profits in its year to September 17, 2011, as a result.
Others including Next passed on the increases to consumers.
Ormond expected more blends and synthetic fabrics to make their way into products at the value end of the market as an alternative to costly cotton.
However, the UK Fashion and Textile Association chief executive John Miln said the rise was not in the same league as the spike of 2010 to 2011. He still expects clothing pricing to rise but believes other inflationary pressures will contribute to this.
The BRC-Nielsen Shop Price Index noted that if price rises persist ” we may see prices rise when current contracts begin to unwind”.