Consumers pay for rising cotton prices

Cotton

TEXT OF STORY

STEVE CHIOTAKIS: Some clothing could get a little more
expensive, thanks to a rise in the price of cotton. Droughts and floods have wiped out a lot of the cotton harvest in China and Pakistan.

The BBC's Rebecca Singer reports.


REBECCA SINGER: A shortage in the world's cotton supply has come at a pretty rotten time for retailers. Having limped through the recession, they're now facing the highest cotton prices for 15 years. And three major U.K. clothing stores have already said they're likely to pass on the cost to consumers -- rather than let their profit margin take the hit.

Neil Saunders is from retail analysts Verdict Research. He says U.S. consumers should prepare for the same.

NEIL SAUNDERS: The whole supply chain in clothing is so interconnected and so global now that even if the U.S. has a relatively good crop of cotton, of course, a lot of clothing is still imported from China. There's too much demand for cotton at the moment and there isn't enough supply.

Cotton's not the the only cost increase retailers are facing -- global shipping and energy bills are higher, too. And after 10 years of falling prices for consumers, Saunders reckons we've reached the bottom. So bargain hunters should grab that $3 t-shirt because prices are unlikely to get much lower.

In London, I'm the BBC's Rebecca Singer for Marketplace.

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