UK consumers have never had it so good. In fact, thanks in large part to sourcing from the Far East, we have been in such a long period of deflation that shoppers have got used to a world in which prices fall consistently.

UK consumers have never had it so good. In fact, thanks in large part to sourcing from the Far East, we have been in such a long period of deflation that shoppers have got used to a world in which prices fall consistently.

So it’s no wonder that cost increases coming through from the Orient are worrying retailers, in fashion in particular (p18). The cotton price may be what’s grabbed the headlines but there’s a structural change going on that is inevitably going to reverse some of the sourcing gains made over the past decade.

As the people of the world’s developing economies discover the attractions of consumerism, it’s inevitable that domestic demand will increase and, at the same time, those people won’t want to work in the factories. What’s happening in China is its own industrial revolution and it’s both inevitable and a good thing, creating opportunities for Western retailers like Tesco.

But it will bring headaches as factory capacity dries up. Retailers are finding different ways to deal with the problem, from shifting production closer to home or to cheaper Asian countries like Bangladesh, through to adding more detail to product to allow them to increase prices, but there is no single easy fix.

No one likes to pay more for anything. But as our ICM poll on page 4 shows, most consumers recognise that UK retailers do their best to keep prices down. They have benefited from a long period when prices have fallen, but it can’t go on forever and, while it might prompt some hot air in the national media, prices will have to rise.

Ultimately, as with everything in fashion, as long as the price rises are proportionate it will come down to product. An extra 50p on a Primark top or £2 on a Superdry hoodie won’t make any difference to shoppers it those retailers keep putting out on-trend fashions that their customers think make them look good.

Raise your mugs

Cheering up the UK’s retailers probably wasn’t front of mind when Prince William decided he was going to propose to Kate Middleton. But at a time when everyone is predicting UK consumers will be in various degrees of despair in 2011, a fairy tale royal wedding might be what’s needed to lift the mood of the nation. And, of course, to get everyone out buying tasteful royal wedding mugs.

tim.danaher@retail-week.com