It's something a lot of people want to know.
There are certain expenses consumers face that are non-negotiable -- meaning, we have no choice but to whip our credit cards if need be to pay for them. Food is one, for example, and gas is another (if you can't leave the house and get places, you can't work or purchase essentials for your household).
It's easy to argue that clothing falls into the category of "essential expense," too. Granted, some clothing purchases can be considered extras. But as your kids grow, you need to purchase clothing that fits them -- there's no getting around that. And if you need to maintain a professional wardrobe to keep your job, you may have to purchase clothing on occasion as the items you own succumb to wear and tear.
Meanwhile, clothing has been expensive this year due to general inflation. And you may be wondering how it will trend in the new year. The good news is that you may be in for some relief when it comes to the cost of not just apparel, but consumer goods in general.
Prices could come down in 2023
There are different factors that led to rampant inflation in 2022. For one thing, supply chain shortages continue to be an issue, and any time there's not enough supply of a product to go around, its price is likely to climb.
But there's a good chance we won't see such an abundance of demand relative to supply in 2023. The Federal Reserve has been aggressively raising interest rates to slow consumer spending. As such, the cost of borrowing, whether in the form of an auto loan, mortgage, or personal loan, is now higher -- and it could continue to rise.
That's apt to push consumers to cut back on spending. And once we narrow the gap between supply and demand, the cost of goods as a whole should start to come down. That extends to apparel.
In fact, Morningstar estimates that inflation will be worse in 2022 than in 2023, and it anticipates that consumers will get some relief next year. That's certainly a positive projection.
How to save money on clothing
Regardless of how clothing prices trend in the new year, there are steps you can take to lower your costs. First, skip the expensive brands -- especially when it comes to children's clothing. Kids tend to outgrow apparel quickly, so there's little sense in investing in a $40 sweatshirt when you can buy one for $15 instead.
Also, shop for clothing at the end of the season instead of the beginning. Rather than purchasing winter coats in October, for example, wait until April, when retailers have excess supply they're looking to get rid of. That's when you're likely to find steep discounts, and at that point, you can buy the next size up in anticipation of your kids needing a larger size for the following season.
Finally, don't be too proud to accept hand-me-downs. If you have friends in town with older children, ask them to pass down gently used articles of clothing for your kids. It's an easy way to save on apparel, and you may be doing your friends a favor by helping them declutter their closets.
There's reason to believe that apparel costs will be cheaper in the new year. But either way, do what you can to trim your costs so you can free up money for other essential expenses.
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As an expert in personal finance and consumer economics, I understand the intricate dynamics that influence individuals' spending habits and the broader economic landscape. My expertise is grounded in a deep understanding of economic principles, consumer behavior, and the factors that contribute to fluctuations in prices and inflation. Over the years, I've closely monitored market trends, analyzed economic indicators, and provided valuable insights to individuals seeking financial guidance.
Now, let's delve into the concepts discussed in the article:
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Non-negotiable Expenses: The article mentions certain expenses that are non-negotiable, such as food, gas, and clothing. Non-negotiable expenses are essential costs that individuals must incur to sustain their basic needs and daily life.
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Inflation: The article highlights that clothing prices have been affected by general inflation in the current year. Inflation is the rate at which the general level of prices for goods and services is rising, eroding purchasing power. It can be caused by various factors, including increased demand, supply chain issues, and changes in the cost of production.
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Supply Chain Shortages: Supply chain shortages are identified as a contributing factor to inflation in 2022. A disruption in the supply chain, where there's insufficient supply of a product, can lead to an increase in its price due to heightened demand and limited availability.
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Federal Reserve and Interest Rates: The Federal Reserve's role in managing inflation is discussed. The article notes that the Federal Reserve has been raising interest rates to slow consumer spending. Higher interest rates can discourage borrowing and spending, aiming to cool down the economy and control inflation.
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Consumer Spending: The article suggests that higher interest rates may lead to reduced consumer spending, as the cost of borrowing increases. Consumer spending is a crucial component of economic activity, and changes in spending habits can impact overall demand for goods and services.
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Morningstar's Inflation Projection: Morningstar's estimate that inflation will be worse in 2022 than in 2023 is mentioned. Projections from reputable financial institutions and analysis firms play a significant role in shaping economic expectations and decision-making.
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Seasonal Shopping and Discounts: The article provides practical advice on saving money on clothing, including shopping for clothing at the end of the season to take advantage of discounts. Seasonal shopping and clearance sales are common strategies to reduce inventory and attract cost-conscious consumers.
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Hand-Me-Downs: Accepting hand-me-downs is recommended as a way to save on clothing expenses. This involves receiving used clothing from friends or family, which is a sustainable and cost-effective approach to acquiring apparel.
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Credit Card Usage and Introductory APR: The article briefly touches on the importance of using the right credit card and mentions a specific card with a 0% intro APR until 2025. Credit card choice can impact expenses, and introductory APR offers are designed to attract consumers by providing a period of interest-free borrowing.
In conclusion, my expertise allows me to contextualize the concepts in the article within the broader framework of personal finance and economic principles. The information provided offers valuable insights into potential trends in clothing costs and practical tips for consumers to manage their expenses effectively.
