U.S.: Cotton prices set to rise by 10 per cent due to soaring labour costs

Be prepared to empty your pocketbooks more than usual if you want to shop spring's latest styles.

Clothing prices in the U.S. are predicted to rise by 10 per cent in the coming months.

The growing cost of labour and raw materials is forcing manufacturers to increase prices, and retailers, in turn, are likely to pass this on to shoppers.

Restrictions on exports from India, the world's second-largest cotton exporter behind China, have also produced cotton shortages.

The cost of cotton alone has doubled over the last year, according to the International Cotton Advisory Committee.

On Friday, it hit a 150-year high at $1.90 per pound.

It's a sharp increase after decades of falling clothing costs caused by cheap overseas labour and retailers who slashed prices during the recession.

Experts explained how factories in China that were forced to close during the recession have now reopened, but labour shortages are pushing wages higher than ever.

And retailers, which previously absorbed rising cotton prices, have now reached their limit, according to Kevin Burke of the American Apparel & Footwear Association.

The rising costs on cotton have also sent the prices of synthetic fabrics soaring as designers look for cheaper alternatives and blends.

The biggest price increases are expected to come in the second half of the year, according to Burt Flickinger III, President of research firm Strategic Resource Group.

And the extra costs will soon be evident at some of America's most popular retailers.

Levi Strauss & Co., Wrangler jeans maker VF Corp., J.C. Penney Co., Nike and designer shoe seller Steve Madden are among those planning to raise prices.

'All of our brands, every single brand, will take some price increases,' confirmed Eric Wiseman, chairman and CEO of VF Corp., whose brands include The North Face, Nautica, Wrangler and Lee. 

Retailers are uneasy about rising costs though, and have expressed concern that the spike in sales over the holidays may not last.

Stores that cater to low and middle-income shoppers will have the hardest time passing along price increases.

'We have been so used to deflation for years and years,' said David Bassuk, managing director in retail practice AlixPartners.

'Customers are going to be surprised.'