Cotton Crunch

Why the fabric of our lives is costing us

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Who knew bad weather in China, India and Pakistan could make Gap T-shirts more expensive? Thanks to spoiled crops and rising postrecession demand for clothing and linens, cotton prices are soaring. From August 2010 to February '11, prices jumped 137%, from 90¢ per lb. ($2 per kg) to $2.13 per lb. ($4.73 per kg). Retailers like Aéropostale, which forecast lower-than-expected earnings because of rising cotton prices, and hotel chains like Best Western, which have seen the cost of bedsheets jump 61% since last year, will have lower margins or pass along the cost to consumers. Cotton is even driving up the price of money. U.S. bills, which are 75% cotton, cost 9.6¢ each to produce in 2010, a 50% jump since 2008. The Government Accountability Office recommends replacing the dollar bill with a $1 coin, which could save the U.S. $5.5 billion over 30 years. Ka-ching!