U.S. shoes and apparel products are driven by rising RMB prices

In the more than a decade since the early 1990s, relying on the cheap labor of developing countries such as China, the United States has produced large quantities of low-priced goods. This not only depressed U.S. inflation, but also allowed the U.S. Federal Reserve Board to conditionally implement low interest rates to stimulate domestic economic growth.

However, as various overseas-manufactured goods for daily use are marked with higher prices on shelves in the United States, the “old era” for American consumers to enjoy low-priced goods is ending.

Rising Renminbi Drives Price Increases

The price of imported goods other than crude oil in the United States has changed for the past 20 years and has fallen by 8% in the past two years.

The U.S. government has been calling for a renminbi appreciation According to the US Wall Street Journal’s 21st figure, the renminbi has appreciated 28% against the US dollar over the past six years. According to the report, the weaker dollar has indeed helped US exporters, but the strengthening of the RMB exchange rate and the increase in domestic production costs in China have increased the prices of commodities that American consumers need.

The above changes are particularly prominent in clothing and footwear. The US Department of Labor data shows that in the past 17 years, US consumer apparel prices have declined in 13 years. However, retailers and manufacturers have warned that new prices for American brands such as "Nike" sports shoes, UGG boots, and A&F apparel will rise all the way this fall.

One of the reasons is that, on the one hand, the price of cotton has risen. On the other hand, factors such as rising labor costs and transportation costs in China's foundry factories and the appreciation of the renminbi have caused manufacturers and retailers to raise prices.

The U.S. Apparel and Footwear Federation estimates that the prices of imported footwear and socks this fall will increase by 4% to 6% year-on-year. Kevin Burke, president of the association, said that the days of clothing and hosiery products are relatively lower than the prices of other retail products.

As China’s aging population trends become more apparent, the proportion of the population entering the labor market is shrinking.

The United States faces inflationary pressure

Rising prices of imported products may make the Fed even scratch its head in the process of stimulating economic recovery.

The latest data shows that the US economy is weak and the overall inflation rate is unlikely to repeat the upward trend of the 1970s. Fed officials feel comfortable with the current level of inflation and continue to maintain ultra-low interest rates close to zero. However, they are hesitant to take any further easing measures because the inflation rate starts to rise.

The US consumer price index rose 3.6% in the year to May this year, exceeding the Fed’s 2% inflation target. The Fed Chairman Ben Bernanke attributed the increase in inflation to short-term increases in oil prices. However, inflationary pressures also come from other sources.