The UK clothing and footwear sector experienced double-digit deflation in March due to subdued consumer demand, however retailers refrained from increasing prices despite ongoing cost pressures.

The latest data from the British Retail Consortium (BRC) – NielsenIQ shop price index shows inflation for non-food items rose slightly to -1.9% on an annual basis in March, compared to a larger decrease of -2.1% in February. This rate aligns with the three-month average inflation rate of -1.9%.

During the period 1–7 March 2025, shop price inflation contracted to -0.4% on an annual basis, compared to a -0.7% drop in February, signalling a persistent deflationary pattern in retail prices, though at a slower pace.

NielsenIQ retailer and business insight head Mike Watkins said: “There is competition on the high street as retailers look to pull in reluctant shoppers with seasonal promotions. However, with upwards pressure on prices, retailers may also need some focussed price cuts to help footfall in the run up to the late Easter.”

In contrast to the non-food sector, food prices witnessed moderate inflation in March. The overall food inflation rate climbed to 2.4% year on year from 2.1% in February, surpassing the three-month average of 2.0%.

The BRC has identified multiple elements influencing both food and non-food categories as contributors to this trend.

BRC chief executive Helen Dickinson explained: “Retailers continue to do all they can to protect customers from the cost pressures bearing down on the industry. Prices fell for most non-food categories, which kept year-on-year overall shop prices in deflation, but at a reduced rate compared to February.”

Retailers anticipate significant additional costs resulting from the upcoming Budget, which they fear will accelerate inflation in the coming months.

Alongside new packaging taxes, slated to be implemented later this year, retailers will be bearing an extra £7bn ($9.06bn) in costs.

“It is crucial that the Employment Rights Bill and business rates reform don’t further inflate costs and increase red tape,” Dickinson added.

Recent data by BRC and KPMG revealed that UK fashion sales fell in February due to unfavourable weather conditions.

By Just Style