Commodity price passthrough, cotton edition

Here are some excerpts of alarmist journalism from the NYT:

A package of Oscar Mayer cold cuts. A pair of Nine West boots. A Whirlpool washing machine.

By the fall, people will most likely be paying more for each of them, as rising prices hit most consumer goods...

After trying to keep retail prices flat or even lower during the recession, Jones says prices for its brands will climb 15 to 20 percent by autumn.

... and here is Michael Roberts appropriately skewering that alarmist journalism.

Yesterday the near month futures price of cotton closed at $1.83/lb. That's pretty high, more than double the price of just a year ago. Before this year, I'm not sure [nominal] cotton prices ever exceeded $1.20...

How much do these high prices matter for the prices we pay for clothes?

Not so much. Consider that there is about 0.6 lbs. of cotton in a typical man's shirt. So that $1/lb increase in cotton prices over the past year means it costs an extra 60 cents to make the Brooks Brothers shirt for which I paid $40. On sale.

That should sound pretty familiar to regular readers who have seen the same trick with food prices.

Passing off 15-20% price increases as cost-driven when they are demonstrably not (at least for raw inputs) seems pretty risky and short-sighted. I can't speak much to the rest of the cost structure, although we are not exactly in a tight labor market in the U.S. either.