Earlier quoted context omitted.
Food and clothing depend on other things (cost of employees, equipment, materials, etc.) When the costs of those things rise, the cost of food and clothing will have to rise.
> Food and clothing depend on other things (cost of employees, equipment, materials, etc.) When the costs of those things rise, the cost of food and clothing will have to rise. Not really. You're pointing to production costs, but production costs just define the price's lower bound, not the price itself. Price depends solely on willingness to pay and pricing strategy, which is higher than the production cost when the…
I was replying to a comment about how intensely competitive these markets are, and how that means margins are driven down. If your business is operating at a very low margin, and costs rise, you will necessarily raise prices, because you are already operating on the price floor.
Low margin businesses are defined by the price floor (the cost) being very close to, if not equal to, the price sold at.