The highest increase in the cost of clothing in the UK in 20 years is affected by China’s labor disputes

The seemingly unrelated appreciation of the renminbi and the Chinese labor disputes hit the British clothing industry. According to the British “Financial Times” report, British clothing costs will increase by the largest in more than 20 years due to factors such as British debt and Chinese labor disputes.

"Financial Times" quoted retail industry research firm Verdict predicts that this year's British clothing prices will rise 4.4%, setting the highest level since 1986. Neil Saunders, director of consulting at Verdict, said that although this will put additional pressure on consumers, the price of clothing cannot be permanently lowered and will only rise in the coming years.

The report pointed out that consumers have become accustomed to the low price of clothes, and because the fiscal austerity measures will lead to a decrease in personal income, it will aggravate public concerns about inflation. Executives from major retailers in the UK said that the entire industry will inevitably rise in price.

Due to the reduction in orders from the United States last year, the British retailers took advantage of opportunities to enter into a competitive agreement with Chinese suppliers, offsetting the cost increase caused by the devaluation of the pound, but now China’s labor disputes have caused wages to rise. The increase in labor costs has squeezed the preferential space.

Luca Solca, an analyst at Sanford C. Bernstein, points out that British retailers are suffering from the "pinch attack" of the depreciation of the pound and the appreciation of the renminbi.

Actually, it is not just the United Kingdom. American consumers who have always preferred "Made in China" are also facing the end of the era of affordable prices. Reuters has reported that a US retail executive said that the appreciation of the renminbi, rising commodity prices, and rising wages of Chinese workers all provide manufacturing costs for Chinese products. Since China's infrastructure and employment teams have already reached a certain scale, there will not be a large number of enterprises withdrawing from China. This will lead Western consumers to spend more on clothing and electronic goods.

However, when British consumers lament that goods are no longer cheap, they should actually pay more attention to their "consumption tax." According to the UK’s fiscal austerity plan, consumption tax will increase from the current 17.5% to 20% from January 4, 2011, which will increase tax revenue by more than £13 billion. Some analysts pointed out that this move will cause retailers to either absorb their own costs or pass them on to downstream suppliers, and consumers will certainly be affected.

Author: a Hasty