Higher prices of shawl, chadar and dhoti along with rubber/PVC footwear pushed the rate of retail inflation of ‘clothing and footwear’ to 8.84 per cent in January, the highest after a gap of little over 8 years.

People in the textile industry blame surge in input prices and more specifically cotton for the rise in prices. At the same time, businesses in the footwear industry say higher input prices along with end of dual price mechanism under the Goods & Services Tax (GST) pushed the retail prices which is being reflected in All India Item Inflation Rate, prepared by Statistics Ministry.

According to data, the retail inflation rate for shawl and chadar surged to over 12 per cent in January this year as against 2.76 per cent in January last year. Similarly for dhoti, it jumped to over 10 per cent as against 4.34 per cent and for saree, it rose to 8.94 per cent as against 4.13 per cent.

In terms of readymade garments such as shorts, trousers and Bermudas registered retail inflation rate of 8.88 per cent in January this year as against 5.13 per cent in the corresponding period of last fiscal. Similarly, Kurta-pajama suits (females) went up to 7.77 per cent against 3.83 per cent.

Narendra Goenka, Chairman, Apparels Export Promotion Council (AEPC) said since the US banned import of cotton products from Xinjiang region in China, global prices of cotton have risen. Cotton and cotton yarn exports from India have risen at the cost of garment exports. Raw cotton exports have grown almost four times in volume terms in last three years. Cotton yarn export also increased 1.6 times in volume terms in the three-year period.

“Cotton prices in India have increased 70-80 per cent in the past one year. Cotton yarn prices have gone up even more than that. Hike in the price of these raw materials have escalated the price of finished products (apparels),” he said.

Harkirat Singh Managing Director Aero Club, known for apparel and footwear brands such as Woodland and Woods, said, “Raw material costs of garments especially cotton has also seen strong surge.”

Footwear

fData showed that all categories of footwear saw massive surge in retail inflation which means higher prices for consumers. For example, retail inflation rate for rubber/PVC footwear jumped to 10.54 per cent in January as against 5.71 per cent in January last year. For leather sandals, chappal, etc, the rate of retail inflation was 9.56 per cent in January this year as against 3.78 per cent in the corresponding month of last fiscal.

According to Singh, inflationary pressures due to higher raw material costs, some shortages and high freight continues to be a challenge for the footwear industry and it is impacting the prices of finished goods. “We have only been able to take a price hike of about 2-3 per cent on footwear in January and have had to absorb most of the impact of inflation as we do not want the demand elasticity to get impacted,” he said.

Further, he highlighted that the new GST rates enforced for footwear priced below ₹1,000 has also contributed to higher prices for the end consumer. “While our products are priced above ₹1,000 but the segment priced below ₹1,000 is a huge chunk of the overall industry. Hence, the higher GST rate has also contributed to increase in prices at the consumer-end,” he added.

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