Can Chinese Footwear And Other Suppliers Escape Inflation?

Citigroup said on Wednesday that U.S. retailers could cancel the impact of rising costs this year and keep prices unchanged, but more retailers may pass price rises to consumers in 2009, as inflation pressures accelerate.

Deborah Weinswig, a global market analyst at Citigroup, said that the import prices of clothing, shoes and household goods increased by 2.1% over the same period last year, according to the latest data released in April.

This can be compared with the situation in December 1998 -2003 February, when the import prices of such commodities continued to decline compared with the same period last year.

She said in a research report.

At the same time, high energy prices have led to a rise in global commodity production and pportation costs.

The increase in product costs will affect every participant in the retail supply chain, starting from the factory, and then affecting all the participants on the supply chain up to the top of the retailer (even to the end consumer).

She wrote.

The increase in production costs that manufacturers need to withstand is likely to be below 5%, "she said.

But she added that suppliers in China and India could hardly escape the inflationary pressure of 10%-15% every year for the next few years.

At the same time, she believes that retailers will face less impact on clothing costs this year, but the price of footwear will increase by nearly 10%, as the cost of leather rises.

Weinswig said, "we believe that more retailers will be able to pass the price rise next year as inflation pressures will accelerate.

"In the companies listed by Weinswig, she said Penney and Kohl" s are in a more optimistic position.

For example, she said, Penney has a long history of developing its own brand, which enables it to establish strong relationships with suppliers.

For this year, J.

C.

Penney management believes that by shifting production from China to other countries, the cost of clothing can be kept flat.

She said.