Ah yes, he does say something about buying the dress in a Muggle shop, Evie! I had forgotten about that. So there's an answer - Wizards do by clothes in Muggle shops.
Excellent point, Michelle and Evie. However, I would also assume that most Wizards who aren't very familiar with the Muggle world wouldn't know exactly how to use Muggle Money. Take Mr. Weasley for instance, on the way to Harry's trial in OoTP he has to have Harry handle the Muggle money because he isn't sure how to use it. It would be like me going to France and trying to buy something with Euros - I wouldn't know exactly how much money I had or if I had enough because it's not something I deal with living here in the States. *grumbles about the current exchange rate of the US Dollar*Originally posted by Michelle/The Marauding Cupcake
Also, to address the question of Muggle money, in SS I believe Hagrid says that you can do an exchange at Gringrott's.