Another consequence of the weak pound is it brings further inflationary pressure from imported items bought in dollars. Not just oil and gas. Clothing in the UK is almost entirely imported. Even companies that manufacture their own ranges mostly do so abroad.
Clothing is mostly bought in dollars from China and India and if the chain stores and supermarkets had not been smart enough to have used their reserves to buy dollars at the high point then the prices would be going up now. However this happy situation can't last and by spring it is expected prices will rise.
Draper's report retailers and suppliers fear that spring 09 prices will be forced up by more than 6% after the pound weakened against both the dollar and the euro this week.
So, no surprise that prices in clothing will rise..except, It IS a surprise!
Fashion wear prices have been deflating continuously at around 3% for two years. And for long periods before that. This was one of the factors which helped sustain that old boast of a 2% inflation rate for 2006-7 .
A 5-10% price hike in March won't help the economy, the consumer, inflation or the MPC. Yet its very likely.
Another reason to doubt that interest rates will fall quite as fast as the optimists are expecting. If the government want the pound to regain some value that will add weight to the voices calling for a rate rise.