UK inflation continues to rise and has now reached its highest level in 41 years as of October. This surge in inflation is primarily driven by increasing energy and food prices, but the fashion sector has not experienced the same level of growth.
According to the Office for National Statistics, the Consumer Prices Index including owner occupiers’ housing costs (CPIH) for clothing and footwear increased by 8.5% year on year in October, slightly higher than the 8.4% increase seen in September. On a monthly basis, fashion prices rose by 1.6% in October compared to a 1.5% rise in September.
In contrast, the overall CPIH rose by 9.6% in October, up from 8.8% in September. As mentioned, the surge in essential expenses such as food, heating, and petrol are the main drivers behind this increase. However, fashion prices have not kept pace with these other cost increases.
This is surprising considering the rising costs for fashion brands and retailers in recent months. However, it seems that the industry is aware of the financial constraints faced by consumers and is choosing not to push prices beyond what they can afford. As a result, many companies have absorbed the increased costs themselves.
The ONS also reported that the Consumer Prices Index (CPI), excluding housing costs, rose by 11.1% in the 12 months leading up to October 2022, surpassing analysts’ expectations of a 10.7% increase.
Unfortunately, this news is particularly concerning for the fashion sector, especially for consumers with lower incomes who have to prioritize essential expenses and cut back on discretionary spending. Low-income households are experiencing a higher inflation rate of 11.9%, compared to 10.5% for higher earners. This indicates that lower-priced retailers and brands, which usually perform well during recessions, may face challenges as their regular lower-income customers reduce their spending.
While the luxury sector has remained resilient due to its affluent customer base, stores targeting middle-income shoppers may benefit as consumers trade down. However, it is evident that low-income households are disproportionately affected by inflation and are forced to make difficult spending decisions.
Useful links:
– Office for National Statistics – Inflation and Price Indices
– BBC News – UK inflation reaches 41-year high in October
