Live (d) to fight another day
About two years ago, clothing manufacturer Rajesh Masand and others like him struggled with the sudden nationwide shutdown. Today, just as demand has declined to pre-pandemic levels, they are faced with rising production costs. They pass on some of the costs, but not all, and choose to make a profit to avoid a hit on sales.
The price of cotton, an important raw material, has risen by 50% in the past year. “Such a price increase is unheard of,” said Masand, who is also the president and chairman of the Clothing Manufacturers Association of India.
The price hike is the result of a combination of factors such as scarcity, speculation and feared cotton hoarding, Masand said. There are a limited number of entities involved in cotton yarn spinning that have taken advantage of the rise in cotton prices and are using it to maximize profits, he claimed.
The price of polyester is also compared to that of cotton, Masand said. So that has also increased, more so with the recent surge in crude oil, he added.
Wholesale textile inflation stood at 14.01% in February 2021, according to data published by the Ministry of Trade and Industry. For clothing, wholesale inflation rose to 4.01% in February 2022, from 1.09% in January.
Textiles are a labor-intensive industry and there has been no willingness to expand production due to rising raw material costs and an uncertain business environment due to the pandemic, Masand said. Supply disruptions, such as labor shortages since the start of the pandemic, still remain in the pockets, he said.
All this drives up prices collectively.
Sure, people are willing to buy even at higher prices, he said. While demand slumped in 2020, there was a rebound in 2021. Currently, demand is near pre-covid levels, with most manufacturers clocking in at around 80-100% of pre-pandemic sales, he said.
DK Joshi, chief economist at Crisil Ltd., attributed higher inflation in this category to the reopening of the economy, which contributed to the recovery in demand. In addition to clothing and footwear, inflation in personal care products also rose to 5.39% in February 2022, from 3.49% in January, he said. That is the highest since May last year.
If you’re a consumer wondering what all this means for you, it’s simple: you have an expensive summer ahead of you. That’s all, as Miranda Priestly would say.
This post The cost of a new summer wardrobe will make you sweat was original published at “https://www.bloombergquint.com/business/the-cost-of-a-new-summer-wardrobe-will-make-you-sweat”