Clothing prices could soar by as much as 8per cent next year, adding £1 to the price of a bra and £10 to a coat.
The warning came from fashion chain Next, which has joined a list of retailers and manufacturers warning that higher cotton prices are about to hit the High Street.
Industry analysts are warning the era of cheap clothing and fast fashions, with prices falling every year, could be over.
Recent official figures from the Office of National Statistics(ONS) picked up the first annual increase in clothing and footwear prices for 18 years.
Details from Next and others suggest this will continue through 2011.
Apart from the impact of higher cotton prices, shoppers will also have to cope with the increase in VAT from 17.5per cent to 20per cent in January.
Households are also being squeezed by a new rise in the cost of food and spiralling energy bills ahead of the winter.
The fashion and homewares group said price hikes early next year were likely to be at the top end of its previous 5-8per cent forecast after the cost of cotton continued to soar.
It added there could be further price rises if the 'speculative bubble' in cotton prices carries on.
Cotton prices are running at a 15 year high after crops were hit in Pakistan and China by disastrous floods in recent months.
Separately, the Indian authorities are rationing cotton exports while City speculators have bought up large quantities in the hope of making a killing.
Primark, Debenhams, the jeans maker Levi Strauss and Hanesbrand, which owns the Wonderbra brand, have also warned of higher prices.
Next warned: 'As a result of further rises in the price of cotton, retail price rises are likely to be at the top end of our previously stated 5-8per cent range for the first quarter of next year.
'The longevity of what appears to be a speculative bubble in cotton prices will be critical in determining prices.'
The company said it is looking for new cotton suppliers, outside of India, China and Pakistan, in order to keep down prices.
Hanesbrand chief executive, Richard A. Noll, said: 'The world has radically changed. There is a clear understanding that prices need to go up in this kind of environment.'
The news on higher cotton prices hit the value of shares in Next and other fashion retailers, notably Marks & Spencer.
Next also released sales figures for the three months to October 30, which revealed a worsening performance in its high street stores. Sales were down 3.3per cent in stores that have been open for more than a year.
However, the firm said strong showing in its online arm Next Directory and additional sales from new outlets 'more than made up' for this decline.
Directory sales rose 7.9per cent, which helped lift Next's total sales for the three month period by 2.2per cent. Next confirmed expectations for annual profits of between £535 million and £560 million.
Matthew McEachran, retail analyst at Singer Capital Markets, said the sales update showed Next 'performed reasonably well' but were 'not quite as good as hoped'.
