Cotton, Apparel & Inflation
October 18, 2022
INFO: [email protected] LIFESTYLEMONITOR.COTTONINC.COM
All content sourced from Cotton Incorporated’s 2021 Online Shopping Survey, a survey conducted with 1,000 U.S. consumers,
April 2021. Additional Sources:
2
Census Bureau.
3
Cotton Incorporated's 2021 Coronavirus Consumer Response Survey, Wave 6,
a survey conducted with 1,000 consumers May 2021. ©2021 Cotton Incorporated.
After the trade dispute realigned trade
flows, orders were slashed with COVID.
A surge in consumer demand with
stimulus made it difficult for retailers to
keep shelves stocked, especially with
the shipping crisis.
Elevated order volumes that were
placed to keep up with consumers and
to compensate for shipping issues are
arriving in ports while concerns about
consumer demand are flaring.
Trade dispute & tariffs
COVID & lockdowns
Stimulus & spending surge
Shipping crisis
Inflation
War in Europe
Higher interest rates & slower growth
Contributing to Volatility in the Cotton Market
COTTON INCORPORATED’S
SUPPLY CHAIN INSIGHTS
COTTON, APPAREL,
& INFLATION
50
60
70
80
90
140
NY/ICE December futures in cents/lb
130
120
110
100
USDA drops US
crop forecast
-20%
Cotton is part
of sell-off in
commodities
Outbreak
of
war in
Europe
Flooding in
Pakistan,
macro
concerns
Everything rally, recovery from COVID
After decades of relative price stability, consumers are grappling with
a surge in inflation after COVID and the war in Ukraine. While prices
for apparel have not moved far beyond their pre-COVID levels,
budgets available for spending on clothes are being impacted by
price increases for non-discretionary goods and services.
IT HAS BEEN A VOLATILE WORLD
Inflation in prices for other
spending categories may
sap income available for
clothing purchases.
Rebalancing Downstream Demand
Consumer spending
patterns have
changed, with stimulus
supporting increased
spending on goods.
Concerns about having product on shelves evolved into concerns about
inventory accumulation.
Spending on Goods Surged After the Pandemic
Price Increases for Necessities Outpace Changes in Clothing Prices
The shipping crisis
made it difficult for
retailers to keep
up with consumer
demand.
As the effect of stimulus
dollars wanes and
consumers spend more on
services, demand for goods
like apparel could slow.
106
104
Retail apparel prices have been higher
year-over-year, but most of those gains
were due to reflating to make up for the
collapse with the onset of COVID.
108
110
112
114
116
118
120
CPI for garments, 1982-84=100
Clothing prices
up marginally
versus 2019
75
80
85
90
95
100
105
110
115
120
125
change in spending vs 2019 average, seasonally-adjusted
change in spending on goods
change in spending on services
Lodging
Spending on goods
25 points stronger
a�er COVID
Consumer Spending & Inflation
Communication
Not only does lodging, food, and energy represent much
larger shares of consumer spending, these categories have
also seen stronger price increases.
Higher prices for spending categories outside of apparel
could pinch income and challenge growth in consumer
apparel spending.
2%
Apparel less Footwear
Budget share Price Change
2%
12%
Shelter
33%
28%
Transportation
18%
20%
Food
13%
11%
Medical Care
8%
27%
Utilities
5%
9%
Recreation
5%
7%
Education
3%
2%
4%
INFO: [email protected] LIFESTYLEMONITOR.COTTONINC.COM
Source: Reuters, Bureau of Labor Statistics (BLS), Bureau of Economic Analysis (BEA)
©2022 Cotton Incorporated.