Fashion retailers are facing more pressure to increase prices after the cost of cotton rose past the $1 (64p) per pound mark for the first time in 15 years.
The cost of contracts for December delivery of cotton rose 4% to $1.0198 (65.5p) in New York yesterday. The news sparked fears that prices on the high street would have to rise further to compensate.
Retailers including Debenhams, Next and Primark-owner Associated British Foods have all warned recently that the increase in cotton prices is likely to mean that prices in stores will have to increase. Next chief executive Simon Wolfson said that the company was experiencing “significant product cost price pressure” with the prices of cotton up 45% on last year and that selling prices would rise between 5% and 8%.
The British Retail Consortium said that in general retailers would do their best to minimise the impact on shoppers.
The floods which have hit big cotton producers Pakistan and China have caused concern over the supply as a combination of high demand and low inventories has pushed up prices. The Department of Agriculture has forecast that cotton availability will drop to its lowest level in fourteen years in 2010-11.