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Clothing deflation rises on discounting

Annual deflation in clothing and footwear rose to 6.5% in June - the second largest fall in prices since the BRC-Nielsen Shop Price Index began in December 2006.

The BRC said that the rise compared to a 6.2% rise in annual inflation in May and that during the last three months, the average rate of deflation had been 6.6% across clothing and footwear.

Across the last 12 months, the average rate of deflation in clothing was 4%, suggesting the rate of price declines is speeding up.

The BRC said that increased discounting was a major contributor to the price falls. It added that retailers were pushing seasonal lines hard and said: “As consumer confidence begins to recover slowly, consumers are prepared to make the most of discounts and promotions with impulse purchases.”

The overall Shop Price Index recorded a 0.7% annual rise.

BRC director general Stephen Robertson said: “With unemployment going up, consumer confidence continues to be fragile. Retailers have reacted by offering widespread discounts and promotions - usually at the expense of their own margins. The Government must play its part by removing unnecessary burdens - allowing retailers to help hard-pressed customers and sustain retail jobs.”

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