From what I've heard, the cost of cotton has gone up because of China buying as much as they can. The old supply & Demand thing.
I know from our experice buying fabric for the store, the cost of cotton fabric has increased 25 to 30% in the last several months, and it doesn't look like it is going to stable out either.
We still sell fabric at between $4.50 to $7.95 (batiks) but may be forced to raise it in the future.
We will hold the line as long as we can, but we have to repurchase fabric to replace what we sell.