Top apparel exporters have been hit badly by ongoing inflation and unstable prices across the globe.Retail outlets are finding it tough to pay electricity bills,shipping charges and other logistics. At the same time, food prices have almost doubled leaving consumers cash-strapped in many countries and may soon trigger a global crisis that will drive millions more into extreme poverty and malnutrition.
According to US-based Trading Economics stats a global website that provides accurate information for 196 countries, by late 2022, Turkey saw extremely high inflation rates of 88.5 per cent, Sri Lanka 66per cent, Laos 36.8 per cent, Pakistan 26.6per cent, Myanmar 19.4 per cent, Sudan 103%per cent, Argentina 88per cent and Zimbabwe 269per cent. Even the economically richer countries of Europe saw double-digit inflation, although the US by comparison, was relatively lower at 7.7 percent.
Sri Lanka, Turkeysuffering mostdue to inflation
As per World Bank estimated Lebanon, Zimbabwe, Venezuela, Turkey and Sri Lanka are the five countries with highest food price inflation.Food prices are a basic concern in poorer countries, where a far larger share of per-capita income is spent on food compared to high-income countries.
Sri Lanka has been the worst affected bythe political and economic crisis, after the president declared bankruptcy last year which devalued the rupee, food inflation spiralled as high as 70per cent. Sri Lankan Apparel Exporters Association leaders say, in the apparel segment, small manufacturers have been hit the worst as they had to cut wastage at all levels.
Yohan Lawrence, president of the Joint Apparel Association Forum (JAAF) has been quoted in an interview with Women’s Wear Daily (WWD) saying, some companies have been giving food rations to their workers, adding to the amount of monthly salary andgiving employees bonuses, to help poverty-stricken workers over the last few months. It is always the small manufacturers who are affected the most while the larger companies are able to fight inflation better. In November 2022, Sri Lanka’s apparel exports for the year stood at $5.14 billion, up from $4.57 billion for the same period in 2021.
Turkey is another country greatly affected by inflation as it was rocked by major earthquakes and at least 9,210 apparel, footwear, and textile manufacturerswere affected and the country was left reeling with soaring prices and a plummeting currency. The annual inflation rate in Turkey in the end of 2022, was 85.5 per cent, according to the Turkish Statistical Institute, and prices of food and beverages increased102.6 per cent, while costs for transportation rose by 107 per cent.
The depreciation of the Turkish lira has caused inflation and cost increases with competitiveness and profitability being negatively affected. Analysts point out, over the last year, electricity prices have gone up 400per cent, gas prices areup 300 per cent, and wages rose 100 per cent, leading to fear and apprehension about what will happen this year.
Inflation expected to move north in FY ’23
Closer home, India’s Economic Survey for 2022-23 has pointed the apparel and footwear segments are among the ones most hit by inflation as prices have risen consistently over the last three years with average annual retail inflation at 9.7 per cent in FY ’23. According to their survey, the average Annual Retail Inflation (based on consumer price index) for clothing and footwear as a category stood at 1.6 per cent in FY ’20 and it touched 3.4 per cent in FY ’21 before more, then doubling to 7.2 per cent. In FY ’23, the average annual retail inflation in clothing and footwear was 9.7 per cent.
In India too, the inflation rate was the highest in April 2022 at 7.8 per cent before coming down to a moderate 5.7 per cent in December 2022 as a result of good monsoons as well as government incentives that ensured adequate food supply. The Indian apparel retail industry like its global counterpartsneeds help to tide over inflation.Well-planned budgets and lower taxes could bring in some redemption as they await the light at the end of a dark tunnel.