Fashion inflation drives overall UK prices higher
UK inflation is continuing to rise and fashion is largely to blame, the Office for National Statistics (ONS) said on Tuesday. In August, the Consumer Price Index (CPI) was up 2.9%, above the average of 2.6% in the year to July and within a whisker of April’s 3% high.
Inflation hasn’t been at these kind of levels for five years and it’s very clear clothing and footwear is a big part of the growth in prices. Fashion inflation was running at 4.6% last month. When was it last that high? 30 years ago.
Clearly, this is a major problem for UK consumers. But it’s also an issue for stores as higher costs are being passed on (at least in part) to their customers but they run the risk of those shoppers buying less or switching to lower-price specialists.
Primark’s update on Monday showed that the company’s keen pricing is certainly proving its appeal to British shoppers and the recent opening of Poland's Reserved, with its keen prices, could also prove to be a hit with bargain-focused shoppers.
The inflation rise also increases the chance of the Bank of England racing interest rates from their historic low and that would hit consumers too. Higher credit card interest and more expensive mortgages would also be likely to mean fashion falls down the spending priority list.
“Rising prices for clothing and motor fuels were the main contributors to the increase in the rate between July and August,” the ONS said, although it added that trips to restaurants and hotels were 3.5% more expensive while prices also rose for mobile phones and furniture.
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