Rapid growth in China’s economy and strengthening in the yuan are spurring inflation, up 8.5% in April from a year earlier. This rate is just down from 8.7% recorded in February, the highest in twelve years, but well above the central bank’s annual target of 4.8%. This ‘rising tide’ of higher consumer prices is reflected in higher retail costs for many component goods and services, including food and rents. But apparel prices continue to experience deflation, as prices fell again in April, off -1.4% from one year ago. These trends of higher consumer prices and lower apparel prices mirror similar trends seen in the EU and U.S. This phenomenon implies tighter margins along the apparel supply chain, from yarn mills to Chinese retailers, as the costs involved in making and selling apparel—raw material costs, wages, rents—rise, while the prices paid by consumers continues to decline. A stronger yuan could spur domestic manufacturers to focus from exports to the retail market, thereby increasing supplies to retailers, and ultimately keeping pressure on Chinese apparel prices in the future.