Now clothing costs are going up too

Just like food and energy, garment costs are going up. In fact, the increases are, in part, because of food and energy. Sarah Gardner unravels the cost of clothing.

KAI RYSSDAL: Next time you open your closet you might want to check the labels. If you've got lots of cheap textiles made in China, hang onto them because, just like food and energy, garment costs are going up. In fact, it's in part because of food and energy. From the Marketplace Sustainability Desk, Sarah Gardner unravels the cost of clothing.

SARAH GARDNER: Apparel makers are facing the same price increases as other manufacturers these days: rising fuel costs have made it more expensive to operate factories and ship goods. Chinese wages are going up and the credit crunch doesn't help. But for clothing makers, there's also the rising cost of cotton. Global supply hasn't kept up with demand. In the U.S., cotton production is expected to shrink 20 percent next season.

Alejandro Plastina is an economist with the International Cotton Advisory Committee.

Alejandro PLASTINA: Of course, this is dictated by the expected increase in planted area to other crops which are more lucrative to U.S. cotton farmers, such as soybeans, wheat and corn.

Soybeans and corn are in demand for biofuels, says Plastina. He also says Wall Street speculators are driving up cotton prices.

PLASTINA: Futures prices have been very volatile.

Despite those cost increases, last month clothing prices in the U.S. actually fell. But that's because retailers have been forced to offer discounts in a slow economy. Scott Krugman at the National Retail Federation predicts if anybody takes a hit, it'll be retailers who will be reluctant to pass on higher costs to consumers.

SCOTT KRUGMAN: The one way it could impact consumers is if there's less merchandise to choose from because retailers are being extra-cautious with their inventory levels.

But some industry consultants say retailers can only hold out so long. Higher clothing prices may eventually be back in fashion.