Wednesday, February 16, 2011

Clothing prices will rise this year!

It's bad enough gas prices are above $3 in many cities, retailers report prices for clothing and necessities will rise this year as commodity costs jump. Remember when the cost of bread, milk and eggs rose last year? By the fall, we will pay more for blue jeans, shoes, lunch meat and appliances.

The New York Times reported cotton prices are near their highest level in more than a decade, after adjusting for inflation, and leather and polyester costs are jumping as well. Copper recently hit its highest level in about 40 years, and iron ore, used for steel, is fetching extremely high prices.

Prices for corn, sugar, wheat, beef, pork and coffee are soaring. Labor overseas is becoming more expensive, meanwhile, and so are the utility bills to keep a factory running.

Retailers have done their best to keep prices flat during the recession as families and consumers are strapped for cash and spend more on important necessities. Most big companies like Kraft, Polo Ralph Lauren and Hanes, say they cannot hold off any longer and will raise prices to protect profits.

Plenty of companies are indicating they will push up retail prices. Kraft, the largest United States food manufacturer with brands like Oscar Mayer, Velveeta and Ritz crackers, said it would raise prices on many products this year without saying which ones or how much.
Soaring prices for coffee have pushed up costs at the coffee shop. Starbucks said last fall that it would raise some prices. Sara Lee, which sells Hillshire Farms meat and Senseo coffee, said that it would, too, on many items.
Economists say the increases may eventually show up as inflation, though they are not yet projecting rates that would set off alarms. Despite some fears, inflation has been extremely low, at a rate of just 1.4 percent annually in December. For consumers, higher prices in stores means there will be a little less extra cash to spend. For companies, profits may be squeezed, making them a little less likely to invest in equipment or to hire aggressively.

To some, the prospect of modestly higher prices is no reason to worry. In fact, rising prices can indicate improving economic conditions. Greater demand from fast-growing countries like China has helped push up the costs of many raw materials — though officials there are worried about inflationary pressures, as are some officials in Europe.
In the United States, the willingness of companies to raise prices shows they are feeling better about the domestic recovery. What do you think?

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