Garment prices have dropped below year-earlier levels for the first time in the ABS monthly series, ending a year in which fashion retailers grew sales mostly by charging more.
Australian fashion is at a pricing turning point. Garments cost 2.2 per cent less in August 2026 than a year earlier, according to the Australian Bureau of Statistics' latest monthly Consumer Price Index. It is the first annual fall since the ABS began publishing monthly annual figures for the category in April 2025.
The drop lands while broader inflation runs hot. Headline CPI rose 4.0 per cent over the same 12 months, driven by electricity, fuel and housing costs.
For brand owners, the shift matters because of what came before it. Over the past year, fashion retailers lifted sales largely by raising prices rather than selling more product. August offers the first sign that the balance is tipping the other way.
Garments go negative
All three garment categories recorded annual price falls in August. Menswear dropped 3.0 per cent, womenswear 1.3 per cent and childrenswear 3.6 per cent.
The two-year view is starker. Between August 2024 and August 2026, garment prices rose just 0.9 per cent while overall consumer prices climbed 7.3 per cent. Men's garments are 3.7 per cent cheaper than two years ago, a real-terms fall of about 10 per cent.
Womenswear's decline is not a one-month sale effect. On a seasonally adjusted basis, which strips out the timing of events such as end-of-financial-year clearances, women's garment prices peaked in April 2026 and have since fallen 3.1 per cent.
Menswear is more volatile. Seasonally adjusted men's prices climbed to a July peak, then dropped 3.9 per cent in August alone, so a single month warrants caution.
Accessories and footwear hold the line
Accessories now carry the category. Accessory prices rose 12.7 per cent in the year to August and are up 24.2 per cent over two years, more than three times the rate of headline inflation. Every month since June 2025, accessories have contributed more to annual inflation than garments.
In August, accessories added 0.097 percentage points to headline inflation, more than the entire clothing and footwear group's 0.085 points. That is only possible because garments subtracted from it.
Footwear is also firming. The ABS reports women's footwear up 6.5 per cent annually, although the seasonally adjusted figure is a more modest 2.3 per cent, flattered by a weak August 2025 base. The steadier signal is momentum: seasonally adjusted women's footwear has risen 5.5 per cent since December 2025 and sits at its highest level since the series began in April 2024.
Across the whole clothing and footwear group, prices rose 2.6 per cent, or 2.0 per cent seasonally adjusted. That is about half the 4.1 per cent rate for all goods.
Sales growth came from price, not volume
ABS experimental retail turnover estimates, built from bank transaction data, show clothing, footwear and personal accessory retailers took $36.1 billion in the 12 months to August. That is up 5.8 per cent on the previous 12 months.
Clothing and footwear prices rose 4.9 per cent over the same period, implying the volume of goods sold grew by less than 1 per cent. Over two years the picture is flatter still: turnover rose 6.7 per cent between August 2024 and August 2026, while prices rose 7.0 per cent.
August breaks the pattern. Turnover grew 5.2 per cent year-on-year while annual price growth halved to 2.6 per cent, implying volumes rose about 2.6 per cent. Outside the Black Friday month of November 2025, it is the strongest result in the series.
Dollar momentum is cooling, however. Trend growth in clothing turnover peaked at 6.2 per cent in May and has eased to 5.1 per cent. The ABS Household Spending Indicator, a separate measure, shows clothing and footwear spending fell 1.0 per cent in August on a seasonally adjusted basis.
Department stores and Victoria lag
The channel split is sharp. Department stores and large online retailers grew turnover just 0.9 per cent in the year to August, against 5.2 per cent for specialty clothing, footwear and accessory retailers. Since August 2019, department store turnover is up 8.4 per cent, compared with 40.6 per cent for clothing retailers.
By state, Western Australia leads clothing turnover growth at 9.1 per cent, followed by South Australia at 6.7 per cent. Victoria (3.8 per cent) and Tasmania (2.3 per cent) trail, and both sit below their own total retail growth.
What 2025 suggests for the rest of 2026
Last year's pattern offers a guide to the months ahead, with caveats. Through 2025, clothing and footwear price growth climbed from 1.0 per cent in April to a peak of 7.1 per cent in March 2026. Implied volumes hovered around zero for most of that run.
Garments look set to stay in deflation through October. Garment prices jumped 2.6 per cent in October 2025. If they hold at August's level, the annual fall in October would be 1.8 per cent. If they repeat last year's month-to-month moves, garments stay about 2.2 per cent below year-earlier levels into December.
Accessories face the opposite base effect. Accessory prices dipped in November and December 2025. Even if they stop rising entirely, annual growth would stay between 8 and 13 per cent through to December.
November is the month to watch for volume. In November 2025, seasonally adjusted clothing turnover rose 3.6 per cent, then fell 5.0 per cent in December, as Black Friday pulled spending forward. Implied volumes that November grew 3.9 per cent, the strongest in the series. This year, retailers enter the promotional period with garment prices already lower, leaving less room to discount without eroding margin.
The question for brand owners into the end of 2026 is whether lower garment prices are buying volume or simply giving away margin. August points to the former. September's figures, due in late October, will show whether it holds.