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Clothing prices forecast to firm up
Oct '10
Rising prices of cotton are seen to hike the clothing prices. This is for the first time in the history of 18 years that clothing prices are depicting an upward move on a year on year basis, driven by the high cost of cotton and also when considering the fact that, VAT rates are to be hiked from 17.5 to 20 percent in January.

Cotton prices now rest at 15 year high levels, mainly due to loss of cotton crops, due to recent massive floods in China and Pakistan.

The impact of this hike in clothing prices will become apparent in the inflation rate, and is expected to cross the Government's estimates of two percent.

High price of cotton coupled with increase in VAT rates from January, are expected to boost the clothing prices by almost eight percent, a leading retailer said. A few global apparel and lingerie brands, too have voiced their apprehension about rise in prices.

Home furnishing items like curtains and upholstered furniture are expected to be affected from effect of rise in cotton prices.

According to the Centre for Economics and Business Research (CEBR) statistics, it is only the hike in cotton prices, which alone is seen to boost the clothing prices by 2.4 percent, by close of 2011.

Estimates suggests that, if clothing prices go up by eight percent, after adding other costs and VAT to these prices, the final cost to the consumer may be hiked in the region of 9-10 percent.

Fibre2fashion News Desk - India

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Courtesy: Commonwealth Bank of Australia

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