Though it once was the most inexpensive of textiles to produce and clothes made from it were very affordable, price levels for cotton this year have hit a 15 year high with an average 17% increase in price.  The sharp increase in price for the raw material can be attributed to several factors.

Decreased Cotton Supplies

The worldwide decrease in the crops of cotton can be linked back to the financial crisis two years ago. In the attempt to earn more money, many farmers stopped planting low-value cotton in favour of more profitable crops such as corn and soya. The decrease in production has been worsened by poor weather across Asia.

India is the world’s second largest supplier of cotton and this year’s poor weather has not only reduced the quality of the cotton produced there but has also hampered the country’s harvesting efforts. This has led to the lowest cotton harvest in 16 years and has left clothing firms grappling for the fewer exports available. In addition to this labour costs have been increasing causing cost-push inflation for clothing manufactures.

Weak Pound

The exchange rate is crucial for British retailers because the great majority of clothes are bought from the Far East, particularly China and Bangladesh in dollars, but sold in Britain in sterling. The poor strength of the pound has meant that freight costs have increased for British importers of cotton clothes.

20% VAT in January

While there are all these increases in cost for cotton producers, VAT is also set to be increased to 20% at the beginning of 2011. This will put large pressure on clothing stores who already have very tight profit margins as it is. In an attempt remain profitable, big high street names like Primark, Next and Debenhams are all set to increase their prices over 2011 by up to 8%.

We regret to announce that these cost pressure have affected the prices of our suppliers and consequently our prices will increase. The two main brands to be affected are Fruit of the Loom and Gildan with the following increases coming into effect as of October 18th:

Fruit of the Loom: + 3 – 7%
Gildan: + 5%

The Good News:

Stedman are also yet to announce a price increase, so our bestselling t-shirts will be unaffected in the short term. We’ve also got some excellent offers coming up over the next few months so keep an eye on our emails to be the first to hear about those.