Higher fashion prices added to UK inflation in April says ONS

By

Sandra Halliday

Published
May 16, 2017

Higher clothing prices were among the factors that caused UK inflation to head up again last month, the Office for National Statistics (ONS) said Tuesday.

Inflation rose to 2.7%, which was more than expected, after being up 2.3% during February and March.

Higher air fares as Britons flew abroad for the Easter holidays made an impact, as did rising energy bills. But the impact of clothing prices that have been edging up in recent months could not be ignored.

Just a day after Charles Tyrhwhitt’s found said his longstanding ‘four shirts for a £100’ price tag would have to rise by around 10%, it seems that higher costs for outsourced clothing are having an effect across the wider industry already.

The weaker pound, which dropped up to 20%, following the Brexit vote means that invoices charged in US dollars or euros (which essentially covers most of the goods fashion retailers and brands buy) now cost considerably more. And as hedging contracts that protected lower prices last year come to an end, stores have been forced to pass price rises on to consumers.

That means inflation is now at a level it hadn’t reached since September 2013 and it’s reached it faster than analysts expected - they had been predicting a rise of 2.6% for last month.

Economists said the figures reflect the squeeze on households at present and that consumers whose wages have stagnated while prices have risen would prioritise necessities over discretionary spending this year. That’s bad news for the fashion sector.

That said, bugdet fashion retailers, including supermarkets, pound shops, value specialists and pureplay e-tailers are likey to reap the benefits of those consumers who still want a fashion fix but are seeking lower prices.

And the 2.7% increase looks unlikely to be the end of rising prices with the Bank of England forecasting a rise to 2.8% this year while some economists say 3% is a more likely figure.