Whisper it softly, it might be only a blip but this could be the end of cheap. A statistic buried in the monthly U.K. inflation figures stuck out like a sore thumb. The cost of clothing and shoes rose by 6.4 per cent between August and September, the biggest increase ever recorded for that period. It was the biggest item in the monthly CPI figures which were otherwise unextraordinary, albeit a continuing worry because the annual rate is 3.1 per cent, a full percentage point above the Bank of England's target.
It is now the ninth month in which inflation has been above target in Britain and it appears to be stuck, remaining at 3.1 per cent for the last three months, but the clothing number is the big one, standing out from cyclical food and fuel prices where Britain is suffering from the need to buy dollar or euro commodities with devalued pounds.
The clothing price rise is mainly "women's outerwear". In other words, the CPI surveyors have spotted that the high street fashion emporia have been jacking up the prices with unusual aggression. Even as the autumn ranges of sensible back-to-work suits and silly Christmas party frocks are shunted off lorries and on to hangers and shelves, the sticker prices are ballooning. The message from the stores is clear: the long holiday is over, now you have to pay.
Marks & Spencer, Britain's biggest clothing retailer, last week warned of tough trading conditions and commodity price inflation as did the firm's biggest rival, Sir Philip Green, boss of Arcadia who said inflation was on the way. But this isn't just about fuel and transport or the soaring global price of cotton or even crashing currencies. It is about the wages of labour in the Far Eastern sweatshops where our clothes are made. Pay for Chinese seamstresses is rising at double-digit rates, not enough to reopen Lancashire cotton mills or Brittany lace-making workshops, but enough to bring us back to earth with a bump and a bigger credit card bill from our ten-year excursion into a world of fantasy fashion.
We have lived through a decade of dirt-cheap suits, shirts and skirts and that era is beginning to end. Unfortunately, it is happening at the end of a vicious recession and at a time when jobs and livelihoods are disappearing. Yesterday, David Miles, a member of the Bank of England's rate-setting Monetary Policy Committee gave warning of the danger of "tightening monetary policy too soon." He said there were few signs of the normal post-recession recovery in the from of rising wages and bank lending growth. "These are not normal times," he said.
The MPC is split over the need to raise rates to ward off inflation or to do the opposite and launch a new programme of "quantitative easing" or printing money. Another MPC member, Andrew Sentance, has repeatedly voted for a rate increase at past MPC meetings and even as the Federal Reserve prepares to flood the market with dollars in November in a new round of QE, the BoE looks set for an ideological divide: the frying pan of hyper-inflation or the bonfire of a new recession. All we know for certain is that party frock will cost you more.