| 17°C Belfast

Cheap fashion era over as price inflation takes toll

Inflation remained stubbornly high at 3.1% after figures showed the first year-on-year hike in clothing prices for 18 years.

In a further sign that the era of cheap fashion is coming to an end, the Office for National Statistics (ONS) reported the annual rate of clothing and footwear inflation was 0.9% in September, the first rise since 1992.

On a monthly basis, prices rose by 6.4% between August and September, the largest increase for that period since records began.

The higher costs offset a decline in air fares and petrol prices and saw the overall Consumer Prices Index (CPI) rate of inflation hold at 3.1% in September - unchanged now for three months, and well above the Bank of England's 2% target.

The latest figures triggered some good news for pensioners, as the Retail Prices Index (RPI) measure of inflation at 4.6% signalled a rise of around £4.49 a week in the basic state pension from next April, compared with last year's £2.40 hike.

Employment benefits, such as jobseeker's allowance and income support, will be based on CPI from next April, as will tax credits and all public service pensions.

The monthly hike in clothing prices was driven by women's outerwear, such as winter coats, where prices increased with the new autumn season, the ONS said.

Weekly Business Digest

Margaret Canning’s selection of the must-read business stories straight to your inbox every Tuesday morning

This field is required

Sarah Peters, senior retail analyst at Verdict, said the increase in clothing bills was down to the weakness of the pound, increased cotton prices, and higher transport costs. She added: "Retailers have squeezed margins as much as they can, and they have little option now but to put prices up. Prices are likely to increase even more over the next six months due to the VAT increase to 20%."

Ms Peters said rising wages in traditionally cheaper labour markets were also having a slight impact on prices, and would become a more prominent factor.

Jonathan Loynes, chief European economist at Capital Economics, said the rise in clothing prices may also have reflected a desire by retailers to soften the transition to 20% VAT in 2011.