Clothing and footwear saw deflation of 0.7% in May, only a month after the sector recorded inflation of the same amount.
The deflation in the sector during May marked a 0.4% drop from last month’s figure, according to the British Retail Consortium-Nielsen Shop Price Index.
The report said that the drop was caused by annual deflation in womenswear and kidswear, both of which saw inflation in April. Downward pressure continued from the footwear sector which was deflationary in April.
However, the BRC warned that this rate of deflation may not be sustained throughout the year. The report said cotton prices were currently up 40% year on year, which was likely to squeeze retailers’ margins further this year.
In the non-food retail sector as a whole, monthly inflation slowed to 1.6% year-on-year, compared with the 2% year-on-year rise seen in April.
Stephen Robertson, director general of the BRC, said: “Clothes and electricals are cheaper than they were last year, as retailers hold prices down in the face of customers’ reluctance to spend. With margins already being squeezed, a VAT increase would be an inflationary pressure too far.”