High Prices Means Holiday Shopping May Suffer
Monday marks the official halfway point of November and those battling for your holiday shopping cash are facing an unexpected opponent this year, an opponent that already has a lot of consumers thinking twice.
CBS News correspondent Bill Whitaker reports just when retailers hoped the coming holidays would get shoppers spending their dollars, rapidly rising prices might make them pinch their pennies instead.
Gas costs $0.13 more per gallon than last year. A gallon of milk is up nearly $0.30. In just the last month coffee has gone up $0.24 a pound. Now cotton prices are at all time highs, up 400 percent in the last two years. Last week's price was nearly double what it was in July.
"We find ourselves in a situation where there's not enough to go around," says Sharon Johnson, a cotton analyst from Penson Futures.
Last spring bad weather in India, Pakistan and China destroyed cotton fields, slashing the global supply while demand is higher than ever. The growing middle class in those countries is spending its new-found wealth on western-style cotton clothes.
Rich Delano works in China, where investors are ignoring stocks and buying bales.
"What they're doing is they're buying actually containers of cotton yarn and holding it, sitting on it," he says.
That ups the prices, which are just now trickling down the supply chain.
The cotton costs more, so the pockets cost more, which means all-cotton jeans are going cost you more. Higher prices are a tough sell in this economy, so manufacturers are cutting where they can, using synthetic blends, lowering labor costs and searching for long-term alternatives, including from an unlikely source: Bamboo. It looks like cotton, feels like cotton and at this point is cheaper than cotton. Delano says inquiries for his bamboo fabric are up almost 50 percent.
"More manufacturers and more brands, more designers are looking for alternative fibers, alternative fabrics," says Delano.
Tough times can be fertile ground for new ideas.
