Pick it if you've got it
The U.S. dollar looks further than ever from paying a positive real rate of interest, leaving both investors and merchants to price scarce resources in an ever-depreciating, ever-more generously supplied currency.
So blame speculators or global demand as you see fit. Sugar’s up, wheat’s up, and cotton’s new record highs are starting to hurt Chinese textile makers. Hence this bale in the wind. Clothing and footwear prices to U.K. consumers rose year-on-year in September for the first time since March 1992, hitting a two-year high in absolute terms, say the official data.
“The longevity of what appears to be a speculative bubble in cotton prices,” will determine 2011 profits at U.K. clothes retailer Next, it warned today, adding that rising costs will force it to raise shop prices.
Over in China, which uses some 40% of the world’s raw cotton output, textile manufacturers face a “shortage of raw material,” said industry group the China Federation of Logistics & Purchasing today, with last month’s record-high prices “endangering” their survival.
Short of an about-face in global monetary policy, the near-halving of Western clothing and footwear prices since 1989, enabled by low-cost Asian labor and plant, is going to struggle to keep deflating.? Think of the Nike shoes, the Ralph Lauren shirts, the socks at Wal-Mart or the underwear at Target.? This is a bit ironic, of course, just as the Fed re-launches its fightback against what it thinks is an imminent “deflation threat.”
Invest accordingly before you next buy a new shirt and shoes.
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