Monday, February 14, 2011

More Signs of Serious Price Inflation Just Around the Corner

AP writes:
The era of falling clothing prices is ending.
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....a surge in labor and raw materials costs is squeezing retailers and manufacturers who have run out of ways to pare costs. 
Cotton has more than doubled in price over the past year, hitting all-time highs. The price of other synthetic fabrics has jumped roughly 50 percent as demand for alternatives and blends has risen.
Clothing prices are expected to rise about 10 percent in coming months, with the biggest increases coming in the second half of the year, said Burt Flickinger III president of Strategic Resource Group.
Like I have said, by mid-2011 the price inflation will become very obvious.

AP continues:
"All of our brands, every single brand, will take some price increases," said Eric Wiseman, chairman and CEO of VF Corp., whose brands include The North Face, Nautica, Wrangler and Lee. Cotton accounts for half the production cost of jeans, which make up about one-third of VF's sales, he told investors in November.

"We have been so used to deflation for years and years," said David Bassuk, managing director in the retail practice of AlixPartners. "Customers are going to be surprised."

4 comments:

  1. If it does come to fruition, I assume some mid to high end clothing retailers won't be with us at this time next year.
    I get a kick out of the person who won't pay more than $50.00 for jeans.
    That's about $30.00 more than I would spend on them and I wear them everyday.

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  2. Deflation?! For a whole decade?

    How did the sky not fall? Someone get Paul Krugman on the line...

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  3. If we see money supply figures continue to slow do you see the price inflation happening anyway? I can't see how they can keep significant price inflation bottled up much longer with the amount of debt the treasury is continuing to issue and the fed seemly monetizing it. But I am curious if Bernanke can get the banks to sit on the money by putting it into excess reserves.

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  4. Nevermind, you answered it in your daily alert.

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