The UK’s Office for National Statistics (ONS) highlights in its Consumer Prices Index for January that clothing and footwear made the largest upward contribution to the 12-month inflation rate with ONS chief economist Grant Fitzner explaining inflation reached a “near 30 year high”.
The index shows the Consumer Prices Index (CPI) rose by 5.5% in the 12 months to January, which is the highest 12-month inflation rate in the National Statistic series since it started.
Clothing and footwear increased the rate by 0.14 percentage points between December 2021 and January 2022. The 2.9% fall in prices in January was smaller than the 4.8% fall a year earlier and is the smallest monthly fall for clothing and footwear prices in January since the National Statistic series began in February 2005.
Fitzner explains: “Clothing and footwear pushed inflation up this month and although there were still the traditional price drops, it was the smallest January fall since 1990, with fewer sales than last year.”
He also points out that some annual changes this year were affected by last year’s lockdown, when many services were unavailable.
GlobalData apparel associate analyst, Louise Deglise-Favre adds: “Clothing and footwear retail prices are heavily dependent on raw materials prices and transportation costs, with these increasing throughout the year, it is unsurprising that apparel prices contributed to the overall inflation in the UK. “
She adds that brands such as Next and Joules warned earlier in the year of price increases to cover their rising production costs and protect their profit margins.
The ONS explains that prices usually fall sharply between December and January each year because of post-Christmas sales. Prior to the Covid pandemic and between the years of 2016 and 2020, the average monthly fall in January was 3.8%. For this reason, the 2021 monthly fall of 4.8% was slightly higher than usual, and the 2022 monthly fall of 2.9% was slightly lower than usual.
It also notes that between November 2020 and January 2021, there was increased discounting compared with other years and in January 2022 there was less discounting. The unseasonal price rise in December 2021, followed by a shallower than usual fall in January 2022, matches the pattern seen in the 2021 summer sales where there was an unseasonal rise in prices in June 2021, followed by a smaller than usual drop in prices in July 2021.
Deglise-Favre concurs, adding: “Brands discounted less over the Christmas and January period, once again to protect profit margins and due to stock availability issues. Sustained high apparel prices are to be expected while heavy supply chain disruptions persist.”
The index notes the upward pressure was spread mainly across men’s and women’s clothing (0.04 and 0.05 percentage points respectively), and women’s footwear (0.04 percentage points), all of which saw smaller price falls in January, compared with a year earlier.
Meanwhile, Fitzner adds despite clothing and footwear pushing up inflation, the rising costs of some household goods and increases in rents also played a part.
However, he says: “These were partially offset by lower prices at the pump, following record highs at the end of 2021.”