Clothes just saw the biggest price jump in three years. How much more will shoppers pay?

MW Clothes just saw the biggest price jump in three years. How much more will shoppers pay?

By Bill Peters

Clothing prices rose 4.2% in April, as the Iran war drives up costs for materials like polyester. But after earlier signs of a rebound, some retailers might be betting shoppers will tolerate it.

Apparel sales generally suffer in the face of high gas prices.

Over recent months, the clothing industry has tried not to test its luck with big price hikes, instead opting for more modest increases, amid signs of a fragile consumer rebound. But data from last month showed apparel makers appeared to relent, as costs from the Iran war and the U.S.-led trade war pile up.

Clothing prices rose 4.2% in the 12 months leading up to April, the government reported on Tuesday. That price hike marked the biggest in more than three years and the fifth straight month of increases, reigniting the debate on how many more markups shoppers can handle.

Analysts said manufacturers and retailers raised those prices in response to - and in further anticipation of - the effects of the Iran war, which has pushed oil prices higher and, in turn, increased costs for shipping and materials like polyester, nylon and cotton.

But the price increases may also reflect some faith in a U.S. consumer that has weathered a half-decade of supply shocks and cost-of-living increases, and may be able to absorb even more, some experts say.

"I think a lot of retailers are just saying, 'Look, we actually have to make a move on price,'" said Neil Saunders, a retail analyst at GlobalData. "'We have to start moving these prices up because it's starting to affect our margins and profitability,' and they want to get ahead of that."

While retailers are worried about costs, they might not be as worried about consumers, he added. Even if shoppers might not necessarily enjoy spending more, many of them are able and willing to do so, for now.

"The consumer is fairly robust and they are actually still showing up," Saunders said. "I think retailers are little bit more relaxed now, and a little bit more confident. That has meant that they've been a bit more comfortable in passing through price increases."

Clothing budget is the first to go

Still, Saunders noted, retailers might come to regret those increases as other costs increasingly eat into consumers' buying power. Apparel sales generally suffer in the face of high gas prices, according to Marshal Cohen, chief retail advisor at Circana.

"The first place that consumers pull back is heavy discretionary, like fashion," Cohen said. Then, it's a cutback on durable goods, such as big appliances like dishwashers or washers and dryers for laundry, he said.

Consumer money spent on apparel sales is down 3% year to date though early May, according to data from Circana. However, the average price per sale is up 5%.

At a high level, spending growth for clothing slowed in March, according to Bank of America (BAC) card-spending data out Tuesday. In April, the spending slowed even more compared to the previous month, but remained higher compared to April of last year. Yet the sheer number of clothing purchases in April was barely higher than a year ago.

"This may reflect not just higher prices but also a possible shift in consumers purchasing their apparel through different channels, such as big-box stores (general merchandise), in order to save money," the note said.

The clothing shopper's playbook also looks a lot different along income lines. In April, the spending growth for high-income customers compared to last year was twice the size of middle-income shoppers, Bank of America researchers wrote.

April's price increase came after some clothing chains this year said they were starting to get their momentum back, and after broader gains in retail sales this year. Shares of big clothing chains were mixed on Tuesday, with mass retailers and discounters faring better.

Urban Outfitters' stock $(URBN)$ fell 2% on Tuesday, while Gap $(GAP)$ fell 1.5%. PVH $(PVH)$, which makes Calvin Klein and Tommy Hilfiger, was down around 1%.

However, shares of mass retailers, like Costco $(COST)$ and Walmart $(WMT)$, were up around 2%, while Target (TGT) was up nearly 3%. Discount chains Ross Stores $(ROST)$ and TJX Cos. $(TJX)$ also notched gains.

Investors will get more context on the war's impact when more retailers report earnings in the weeks ahead. The government is also set to release data on April's U.S. retail sales this week, following a 7.1% sales gain for clothing and clothing accessories stores over the first three months of the year.

Retailers learning to keep their inventories tighter

When energy costs jumped following Russia's invasion of Ukraine in 2022, Walmart, Target and other retailers said that consumers quickly began spending more on essentials, such as food, to ensure they had the basics covered. Clothing, as a result, sat on racks and stockroom shelves unsold. Retailers have tried to keep their inventories tighter since.

When President Donald Trump's tariffs crash-landed onto the economy last year, there were concerns that retailers and clothing makers had little room to raise prices without scaring more shoppers away. Clothing prices wobbled between small increases and decreases last year, as chains shuffled production and tried to stock up ahead of those import taxes, while cutting costs or making targeted increases on items geared toward less-sensitive high-income consumers.

But even amid broader concerns about consumer spending, recent results from Urban Outfitters showed a turnaround at its namesake stores, where younger consumers have been hit harder by inflation. Meanwhile, its wealthier consumers continued to spend at its Anthropologie locations.

Elsewhere, Gap, which last year said it was "getting its vibe back," highlighted eight straight quarters of same-store sales growth in March. Both Gap and Urban Outfitters have tried to roll out new gear and new marketing to bring consumers back into stores.

Market worries about tariffs have faded, after the Supreme Court in February struck down tariffs issued under Trump's emergency powers. But Sheng Lu, a professor of fashion and apparel studies at the University of Delaware, said tariffs still represent a substantial cost burden for fashion brands and retailers.

He also said that retail prices generally don't immediately rise in response to external factors.

"I think the price increase for clothing has been postponed, compared to many different products," he said of the increase in April.

Most clothing that Americans wear is imported, and a single pair of jeans, for instance, can bounce between five or six different nations before hitting U.S. store shelves, as it gets woven and adorned with buttons, zippers and different materials. More than 70% of U.S. clothing imports come from Asia, where nations like China and Vietnam have been targets of Trump's trade war, Lu said.

Lu also said that petroleum is a major input in materials like polyester, a challenge for clothing companies as the Iran war drives oil prices higher. At the same time the price of polyester has been rising, demand and prices for cotton have also ticked up, as manufacturers shift to natural fibers. Raw materials typically account for 60% of a garment's total production costs, he said.

However, he, too, said April's price increase for clothing likely reflected some degree of confidence among retailers.

Saunders said consumers have more flexibility in managing their budgets for clothing than they do for the most basic necessities, like food. Consumers could, for instance, simply buy fewer shirts and pants, or go to any number of discounters.

"If the prices of food go up, you can do things, but it's really difficult to cut volumes because everyone needs to eat," he said. "It's difficult to trade down because the food is priced very competitively."

Andrew Keshner, Robert Schroeder and Jeffry Bartash contributed.

-Bill Peters

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May 12, 2026 17:09 ET (21:09 GMT)

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