The rate of deflation on clothing and footwear slowed to 0.9% in March 2010, down from 4.9% in March 2009, according to the British Retail Consortium-Nielsen Shop Price Index.
The 0.9% figure marked a slight increase from February, when the rate of deflation in clothing and footwear was at 0.8%.
The British Retail Consortium (BRC) said that because a considerable proportion of clothing and footwear products are imported from overseas suppliers, it is likely that previous falls in the value of sterling were responsible for the sharp deflation rates in 2009.
The BRC also warned that the price of cotton is currently 75% higher than a year ago, which will exert some upward pressure on clothing retailers in the coming months.
However, the report also observed that clothing prices are lower than last year, which suggests that retailers are reducing their margins to absorb these cost increases. However, prices increased 0.3% month-on-month in March compared with February.
The report showed that the non-food sector as a whole was still experiencing inflation but that the rate had slowed to 1.3% in March from 1.9% in January and February.
Stephen Robertson, director general of the BRC, said: “The competitive battle is even fiercer than usual as retailers fight it out to overcome the reluctance of customers to spend caused by pre-election uncertainty. Falling shop price inflation is particularly welcome relief for consumers as they face sharp rises in other living costs, such as fuel.”