Clothing prices fall 0.5% in June as retail competition holds down prices

ONS data showed clothing and footwear prices fell 0.5% in June after rising 0.2% in May, as supermarket competition and summer promotions helped limit price rises, although retailers continue to face pressure from employment, packaging and energy costs.

The Consumer Prices Index rose by 2.6% in the 12 months to June 2026, down from 2.8% in May, according to figures released by the Office for National Statistics today. Inflation remains above the Bank of England’s 2% target.

Harvir Dhillon, Economist at the British Retail Consortium, commented: “Retailers are already facing immense financial pressure, squeezed by higher National Insurance, the triple packaging tax, and other input cost increases tied to the conflict in Iran.

"If retailers are to keep prices affordable for consumers in the long run, the Government needs to take practical steps to lower the everyday cost of doing business.

"Andy Burnham has taken immediate action to ease pressure on household budgets; he must now look to do the same for businesses, by cutting non-commodity charges on energy, and reducing the employment cost burden to help tackle the youth unemployment crisis.”

Promotions support retail demand

The latest figures follow a sustained period of discounting across food and non-food categories.

Shop price inflation remained at 1.2% in June, with retailers promoting clothing, footwear and lighter household textiles in response to hot weather. Food shop-price inflation fell from 2.7% in May to 2.4% in early June, while non-food inflation edged up from 0.5% to 0.6%.

Promotions also supported demand. Barclays data covering 23 May to 19 June showed clothing spending increased by 2.4% year on year, while clothing transactions rose by 3.5%. Department-store spending climbed 9.7%. Total UK card spending grew by 1.9%, improving from 0.8% in May but remaining below the CPIH inflation rate recorded for that month.

BRC calls for lower business costs

The BRC said retailers were being squeezed by higher employer National Insurance contributions and more than £2 billion in annual packaging-related charges.

The organisation has also linked higher production, shipping and distribution costs to the conflict in Iran. 

Prime Minister Andy Burnham announced his first household cost-of-living measure on 21 July, cutting VAT on domestic electricity from 5% to zero from 1 October. The policy is expected to reduce the average household electricity bill by about £45 a year.

The BRC said comparable action for businesses would help retailers keep prices affordable over time. The next official UK inflation figures are scheduled for 19 August.