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Price deflation slows in New Year

Price deflation on clothing and footwear has slowed down at the start of this year, according to the British Retail Consortium.

The Shop Price Index shows that in the clothing and footwear category during January, shop price deflation was 3.7% year-on-year, compared to a 4.2% year on year drop in December.

On a month-on-month basis, clothing and footwear showed deflation for the second consecutive month and prices were down by 2.5% in January, against December when prices were 0.4% lower than in November.

Price inflation including food climbed to 1.2% year on year in January against the previous year, compared to 1% year on year in December.

Although January is traditionally the month for discounting, retailers increased the level of discounting last month, said the BRC. Stephen Robertson, the BRC's new director general, said: “While very little inflationary pressure came from the high street, households faced dramatic increases elsewhere in their domestic budgets. What needs to be done now to boost fragile consumer confidence is for the Bank of England to make a series of momentum building rate cuts. This would avoid the need for panic reductions later on.”

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