The Cost Of A New Summer Wardrobe Will Make You Sweat
Clothing and footwear inflation rose to a record high in February. You may want to rethink that new summer wardrobe!
"Florals? For spring? Groundbreaking."
In the words of Miranda Priestly from 'The Devil Wears Prada', a flowy and flowery summer wardrobe may not break new ground, but if you are out shopping this year, it will break your budget. And no, you don’t need to shop at a designer boutique for that to hold true.
Clothing and footwear inflation rose for the tenth straight month to 8.86% in February 2022 — the highest in the current series which maps data from 2014, according to Ministry of Statistics and Programme Implementation. While it rose by 9.66% in rural areas, it rose 7.64% in urban areas.
Headline inflation rose to 6.07% in February — the highest since June 2021 — from 6.01% in the previous month. Inflation in the clothing and footwear category has been running higher than headline inflation for eight months now.
Roti, Kapda Aur Or Makaan
While it's inflation in food that usually dominates Indian consumer sentiment, inflation in items of clothing and footwear has outstripped inflation in food prices and housing rental inflation for ten months now.
Clothing and footwear hold the least weightage of the three at 7.36%. Translation — while you won't compromise on roti (food) and makaan (home), you may have to compromise on kapda (clothing).
Sarees, fabrics, shirts and trousers all saw inflation in the range of 8.5-10.5% in February 2022. These occupy the maximum weightage of all items of clothing and footwear in the Indian consumer basket, according to the Ministry of Statistics and Programme Implementation.
Inflation in second-hand clothing was at 22.45% in February. While that was lower than 22.75% in January, it continues to remain the item which saw the maximum inflation.
Live(d) To Fight Another Day
About two years ago, clothing manufacturer Rajesh Masand and others like him were grappling with the sudden lockdown imposed nationwide. Today, just as demand has inched back to pre-pandemic levels, they are facing rising costs of production. They are passing on some of the costs but not all, choosing to take a hit on profits to avoid a hit to sales.
The price of cotton, a key raw material, has risen by 50% in the last one year. "Such a price rise is unheard of," said Masand, who is also the president and chairperson at the Clothing Manufacturers Association of India.
The rise in prices is because of a combination of factors such as shortage, speculation and feared hoarding in cotton, Masand said. There are a limited number of entities involved in spinning of cotton yarn, which have taken the advantage of the price rise in cotton and are using that to maximise profits, he claimed.
The price of polyester, too, is benchmarked to cotton, Masand said. So, that has seen a rise as well, more so with the recent surge in crude, he added.
Wholesale inflation in textiles was at 14.01% in February 2021, according to data published by the Ministry of Commerce and Industry. For apparel, wholesale inflation rose to 4.01% in February 2022, from 1.09% in January.
Textile is a labour-intensive industry and there was unwillingness to expand production because of rising raw material costs and an uncertain business environment because of the pandemic, Masand said. Supply disruptions, such as labour shortages since the onset of the pandemic, still persist in pockets, he said.
All this is collectively pushing up prices.
To be sure, people are willing to buy even at higher prices, he said. While there was a slump in demand in 2020, there was a rebound in 2021. Currently, demand is almost at pre-covid levels and most manufacturers are clocking about 80-100% of pre-pandemic sales, he said.
DK Joshi, chief economist at Crisil Ltd., attributed the higher inflation in this category to the reopening of the economy, which has helped bring back demand. Along with items of clothing and footwear, personal care items too have seen a rise in inflation to 5.39% in February 2022 from 3.49% in January, he said. This is the highest since May last year.
If you are a consumer and are 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.
