Recent apparel CPI levels were the highest since 1999, and the year-on-year rate was strong compared with the average over the past couple of decades, the update said. From early 2024 through the third quarter of 2025, year-on-year increases in retail clothing prices averaged 0.8 per cent. Since February, the average annual rate of increase has risen to 3.9 per cent.
US apparel CPI rose 0.1 per cent month on month in August after two declines and was 3.7 per cent higher year on year, with recent CPI levels the highest since 1999, Cotton Incorporated said.
Cotton-dominant apparel import costs rose to $3.77 per square metre equivalent, excluding tariffs.
Real apparel spending grew 1.3 per cent month on month and 3.9 per cent year on year.
The average cost per square metre equivalent (SME) of cotton-dominant apparel increased in August to $3.77 per SME from $3.71 per SME on a seasonally adjusted basis. These prices have generally stayed near current levels since late 2023, but the import costs do not include tariffs. For most locations, tariffs are 10-12.5 percentage points higher than in 2024, Cotton Incorporated said.
Real consumer spending continued to support US gross domestic product (GDP) growth. In August, the latest month for which government data was available, real consumer spending was 2.6 per cent higher year on year, above the longer-term average of 2.2 per cent since 2008 and the 2026 average of 2.3 per cent. The update said above-average growth was notable because consumer confidence had fallen to the lowest level in more than a decade, consumers were dealing with inflation, and real wage growth was under pressure.
Several explanations have been suggested for the resilience in consumer spending, including the wealth effect, the update said. The median home price and the stock market continued to hover near record highs, which can support spending comfort for consumers who own those assets.
A lower savings rate may also be enabling spending. Since early 2024, the personal savings rate has fallen from a recent peak of 7.2 per cent in January 2024 to 4.1 per cent in August. In 2022, when inflation surged after COVID-related stimulus, the savings rate dipped below 4.0 per cent for several months. Excluding 2022, the current savings rate is the lowest since the period preceding the financial crisis in 2006-08, according to the update.
Not all US households own homes or stocks, and there is a limit to how low savings rates can fall, raising concerns about whether consumers can maintain above-average spending growth. However, spending growth for clothing has been stronger than the overall rate, and annual spending growth on clothing has outpaced overall spending even though apparel can include discretionary items, the update said.
The US economy was estimated to have added 29,000 jobs in September, well below the 162,000 job gain initially reported for August. Revisions for the previous two months were negative: the July figure was reduced by 31,000 to a loss of 10,000 jobs, and the August figure was cut by 29,000 to 133,000 from 162,000. The 12-month average for job gains was near 41,000 for October 2025-September 2026, Cotton Incorporated said.
The unemployment rate rose marginally to 4.2 per cent from 4.1 per cent, though it remained historically low despite slower hiring. Excluding the volatile period around COVID, the rate has been below 5 per cent since 2016, the longest stretch below 5 per cent since records began in the late 1940s.
Wages increased 3.0 per cent year on year in September, extending a downtrend in place since early 2022. Excluding the volatile period around COVID, wage growth in September was the lowest since December 2019. In every month since April, inflation has been higher than wage growth, suggesting persistent pressure on real earnings that could eventually affect consumer spending.
The Conference Board’s Index of Consumer Confidence posted its largest move in 16 months in September, falling 6.7 points to 81.9, the lowest reading since 2014. The update noted that consumer confidence is tracked because of its potential association with consumer spending. Index values have followed a general downtrend since 2018, even as spending has posted sustained increases over the same period, while lower confidence and pressure on real earnings have raised concerns about consumers’ willingness and ability to maintain spending growth.
After relatively flat growth of 0.1 per cent in July, overall consumer spending adjusted for inflation increased 0.6 per cent month on month in August. On a year-on-year basis, overall spending was up 2.6 per cent, above the 2.3 per cent average over the past 12 months, the update said.
Inflation-adjusted spending on garments rose 1.3 per cent month on month in August, the strongest monthly growth in two and a half years and the highest since December 2023. Apparel spending was 3.9 per cent higher year on year, nearly double the multi-decade average and building on strong growth a year earlier, when year-on-year apparel spending growth in August 2025 was 8.7 per cent.
Fibre2Fashion News Desk
