Surging raw material costs and higher freight expenses could force fashion retailers to implement price hikes later this year. In such a scenario, apparel giant H&M is identified as one of the primary laggards, according to a recent report from RBC (Royal Bank of Canada) reviewed by Dagens Industri.

Since the onset of the conflict in Iran in late February, raw material costs for garment manufacturers have climbed by approximately 15-30 percent, according to RBC estimates. This, coupled with rising logistics costs, is expected to lead many fashion chains to raise prices during the second half of this year and into next year.

RBC assesses that apparel manufacturers with greater operational flexibility, attractive pricing power, and the margin to further increase prices will fare better in this environment.

'We prefer Inditex and Next over Abercrombie & Fitch and H&M,' the bank stated in its latest analysis.

H&M, along with British retailer Primark, is described as being among the fashion companies most heavily exposed to rising commodity costs.