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Discounting drives deflation to record levels

Clothing and footwear suffered another month of heavy discounting in February, driving deflation to record levels  of 12% on last year, according to the British Retail Consortium and Nielsen.

All categories in clothing and footwear have now experienced deflation for six consecutive months, with the two divisions heavily underperforming the retail sector average.

Last month, the BRC/Nielsen Shop Price Index fell 1.4% year-on-year, compared with 12% for clothing and footwear – the deepest level of inflation since records began in December 2005.

Deflation in February was above the three month average of 10.6% and the 12 month average of 8.3%.

Womenswear and kidswear saw the biggest drops, with discounting the biggest cause of the price drops.

Mike Watkins, head of retailer and business insight, Nielsen, said: “We have seen further falls in the Shop Price Index at the start of 2014 in particular in food.

“This is reflective of a challenging trading environment due to weather and weak demand, but also more favourable global supply conditions during the second part of 2013. Looking ahead, we still anticipate shop prices to remain below CPI for the immediate future”

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