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Rising cost of clothes could signal end to ‘cheap chic’

Biggest ever month-on-month increase in prices down to more expensive cotton, labour and transport costs, says ONS

The days of “cheap chic” and throwaway fashion could be numbered, because the cost of clothes is rising at its fastest rate for nearly 15 years.

The “fast fashion” trend, where T-shirts sell for £2 and jeans are priced at less than a fiver in supermarkets, is being battered by big increases in the cost of cotton, labour and transport.

Figures show the cost of clothing jumped 3.7% between July and August – the biggest month-on-month increase since the Office for National Statistics (ONS) started compiling the data in 1997. The biggest price rises were recorded on coats and jackets.

The leap in clothing prices was one of the biggest contributors to a 4.4% increase in the cost of living in August, measured by the consumer prices index (CPI).

Earlier this year, the price of cotton hit its highest level, in real terms, since the American civil war in the 1860s and traders are worried that this year’s crop may be hit by floods in Pakistan and tropical storms across the US cotton belt.

A drought in Texas pushed the cotton price to .27 (£1.44) per lb in March, a 175% increase in less than a year. About 50% of the price of producing a pair of jeans is the cost of the cotton. For other clothes, 60% of the shop price is the fabric cost and one third of that is the raw material.

Last month’s increase in prices was not unexpected. Last year, when cotton prices took off, fashion retailers including Next and Debenhams warned that prices would rise this year by up to 10% and Lord Wolfson, the chief executive of Next, predicted that women would stop bulk-buying clothes.

Research conducted at Cambridge University recently found that, as clothing prices have come down, the number of garments bought has soared fourfold. The study found that the average British woman buys half her body weight – 28kg (62lb) – in clothing every year.

Clothing companies are also having to contend with workers in south-east Asia demanding big pay increases.

Earlier this month, Top Form International, which makes bras and underwear for several of the world’s biggest brands, became the latest global clothing producer to scale back its Chinese workforce. The company said its Chinese wage bill was increasing at a rate of 20% a year. A number of big manufacturers are switching production to cheaper firms in countries such as Vietnam and Bangladesh.

Sarah Peters, a retail analyst at Verdict Research, said rising prices and falling disposable income are forcing shoppers to rethink shopping patterns. “There is a trend towards people buying one special item because they can’t afford to buy lots at cheap prices,” she said.

Peters expects prices to rise faster still in the autumn/winter season and to keep rising in years to come. “Over the last decade, it has been very, very competitive and prices have been falling sharply. But now there are just too many pressures – labour, cotton and fuel.”

She said cheap and cheerful retailers, such as Primark and Matalan, have tried to keep their prices low by “absorbing” rising costs, but says the rock-bottom price tags are no longer sustainable.

“It is certainly much more difficult at the value end of the market,” she said. “Price rises started to come through last year, but they are far more prevalent this year and now as we move into winter [and people start buying thicker clothes] it is going to be harder to disguise the increases.”

Primark, one of the pioneers of the “pile it high and sell it cheap” approach, admitted earlier this week its sales were under pressure.

But John Bason, finance director of parent company Associated British Foods (ABF), said Primark was still committed to not passing on the price increases to its customers. © 2011 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds