UK Clothing Inflation Stays Low as Retail Sales Rise

UK clothing inflation remains subdued as headline rate creeps up

UK consumer price inflation ticked higher in August 2026, but clothing and footwear continued to act as a brake on the overall rate. According to the Office for National Statistics (ONS), the headline consumer price index (CPI) rose to 3.1 per cent year-on-year, up from 2.9 per cent in July. That leaves inflation 1.1 percentage points above the Bank of England’s 2 per cent target.

Transport made the largest contribution to the annual rate, with motor fuel prices 23.0 per cent higher than a year earlier. Stripping out energy, food, alcohol and tobacco, core CPI held steady at 2.6 per cent.

Clothing and footwear prices edge up just 0.2 per cent

Against that backdrop, clothing and footwear prices rose only 0.2 per cent year-on-year in August, slowing from 0.5 per cent in July. Within the category, clothing prices increased 0.6 per cent, while footwear prices fell 1.9 per cent. On the month, clothing and footwear prices rose 0.6 per cent.

The detail shows a mixed picture across sub-categories. Womenswear prices rose 0.8 per cent year-on-year and menswear 0.3 per cent. Garments for infants and children fell 0.3 per cent, while clothing accessories jumped 4.6 per cent. Footwear prices declined for men, women and children, by 2.2 per cent, 1.8 per cent and 0.5 per cent respectively.

Retail sales volumes climb in August

Sales volumes at textile, clothing and footwear stores in Great Britain rose in August. The seasonally adjusted ONS volume index stood at 104.7, up from 103.5 in July and 103.0 in August 2025, according to preliminary figures. The value index rose to 106.1 from 103.8 a year earlier — a larger increase than in volumes, suggesting that higher prices accounted for part of the growth.

Over the three months to August, volumes at these stores were 0.6 per cent higher than in the previous three months.

Online sales told a different story. Average weekly online sales at textile, clothing and footwear retailers fell 2.5 per cent from July to £316.4 million, and the online share of these retailers’ sales eased to 28.1 per cent from 29.1 per cent, according to preliminary ONS figures.

Total retail sales volumes, including automotive fuel, rose 0.5 per cent on the month and 2.4 per cent year-on-year.

Consumer confidence reaches two-year high

The NIQ GfK consumer confidence index rose three points to minus 14 in August, which GfK described as its highest level in two years. The major purchase index, a gauge of willingness to make big-ticket purchases, rose five points to minus 7.

Card spending data from Barclays — which sees nearly 40 per cent of UK card transactions — showed clothing spending up 0.9 per cent year-on-year in the four weeks to 20 August, while the number of clothing transactions rose 6.1 per cent.

Meanwhile, the UK unemployment rate for people aged 16 and over was 4.9 per cent in the three months to July, unchanged from the three months to June, according to the ONS.

Interest rates hold steady as pound strengthens

The Bank of England left Bank Rate unchanged at 3.75 per cent in August. The pound strengthened 1.2 per cent against the dollar over the month, averaging $1.3544 compared with $1.3379 in July, according to the Bank. Against the euro, sterling weakened 0.3 per cent to an average of €1.1682 per pound. Compared with August 2025, the pound was 0.7 per cent stronger against the dollar.

What it means for fashion retail

For clothing retailers, the picture is one of gentle volume growth set against a consumer who is still cautious but gradually more willing to spend. Sales volumes at textile, clothing and footwear stores are above their level of a year earlier, and the value of those sales is rising faster than volumes — a sign that price increases, however modest, are doing some of the work.

The gap between headline inflation at 3.1 per cent and clothing inflation at 0.2 per cent is striking. It suggests that fashion is not currently a driver of the cost-of-living squeeze. With consumer confidence at a two-year high and the major purchase index improving, there may be room for further recovery in discretionary spending, though the Bank of England’s decision to hold rates at 3.75 per cent signals that policymakers are not yet ready to declare victory on inflation.

Note: this article combines the most recent official data available at the time of writing. Reporting lags differ by indicator and country, so not all figures refer to the same month. Each data point is labelled with its reference period.