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Thursday, Jul 10, 2025

UK inflation driven down by discounting from clothing retailers

UK inflation driven down by discounting from clothing retailers

ONS says consumer prices index fell to 0.3% in November from 0.7% a month earlier

Steep discounting by clothing retailers pushed down UK inflation in November as the second national coronavirus lockdown in England and tough restrictions across the country kept consumers away from the high street.

The Office for National Statistics (ONS) said the consumer prices index fell to 0.3% in November from 0.7% a month earlier. City economists had forecast an inflation rate of 0.6%



Retailers are under renewed pressure as the rapid growth in infections discourages consumers from heading to the shops and amid fresh restrictions imposed in England, alongside tough measures in Scotland, Northern Ireland and Wales.

Consumers increased their spending during England’s four-week lockdown, but did so online, according to figures from the British Retail Consortium.
The ONS said clothes prices would usually go up in November in the run-up to Christmas. However, the pandemic has drastically altered usual spending trends and the British economy has been struggling to escape the deepest recession for more than 300 years.

Falling food and drink prices also dragged down the inflation rate by the most since 2017, driven by goods such as vegetables and confectionery. These were partially offset by rising prices for games, toys and hobbies.

The drop in inflation comes as the second national lockdown in England forced the closure of many non-essential shops, making it harder for retailers to sell clothing at normal prices. Analysts said the extension of Black Friday discounts by some retailers for the whole month of November – in a bid to boost consumer spending during lockdown – also influenced the drop in inflation.

In additional to steep discounts, reminiscent of the first lockdown in March and April, analysts said the failure of several big high street clothing chains in recent weeks may have also contributed to falling prices, as companies liquidate their stocks.

Economists said inflation was likely to remain below the 2% target set for the Bank of England’s interest rate setting committee, as higher levels of unemployment and tough coronavirus restrictions drag down demand for goods and services. However, Threadneedle Street is not expected to inject further stimulus into the economy when its monetary policy committee (MPC) next sets interest rates on Thursday, after pumping an extra £150bn into its quantitative easing bond-buying programme last month.

Despite the weak economic recovery weighing on inflation, analysts said a disruptive Brexit at the end of the month could lead to a fall in the pound and chaos at the ports, which would drive up the cost of imported goods – fuelling a rise in inflation.

Yael Selfin, the chief economist at KPMG UK, said: “Early discounting in clothing and footwear lowered inflation, as retailers cut prices to try to boost consumer spend. Working from home has changed people’s needs and households exercised more caution, reining in some non-essential spending in November.

“Despite the weak economic background, inflation could accelerate in coming months, with border frictions as a result of Brexit causing some prices to rise more than usual.”

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