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Prices for 'pretty much everything' have stopped rising, says Next chief

Next retailer chief Lord Simon Wolfson
Next retailer chief Lord Simon Wolfson

The chief executive of Next has said price rises for "pretty much everything" are slowing down, in the clearest sign yet that Britain's inflationary crisis is nearing its end.

The retailer, seen as a bellwether for the sector, said it was now expecting to push through "materially lower" price rises in its shops this year, as inflation in its own costs starts to slow.

Chief executive Lord Wolfson said: "Virtually every element of the supply chain looks more benign.

"Are we past peak inflation? I can only speak for Next, but I think once we get into autumn/winter, then I can't see any signs of inflation picking up again in the following year."

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Next had previously said it expected to raise prices by 8pc in the first half of 2023 and a further 6pc in the second half of the year.

However, on Wednesday the company cut that guidance.

Next is now preparing to increase prices by 7pc in the first half of the year and 3pc in the second half.

Bank of England Governor Andrew Bailey last week urged businesses not to push through large price rises, warning it could inadvertently force interest rates higher.

Asked about the comments, Lord Wolfson said: "I'm not going to get involved in a public argument with anyone, let alone the Governor of the Bank of England, but the view we've taken is where we get better prices, we pass it on to customers, and where those prices go up, we've had to pass it back."

Despite easing cost pressures, Lord Wolfson said this year was still set to be "very challenging" for Next.

The retailer, which has 466 stores, is still expecting sales to fall by around 1.5pc this year.

Slowing inflation was unlikely to provoke an immediate boost to sales, Lord Wolfson said, with people likely to wait and see what happens with their credit card bills before splashing on new clothes.

He said: "I don't think customers are going to think: inflation is coming down next autumn so I'll go out and buy a new dress."

Profits are expected to decline to £795m this year, compared to £870m in the 12 months to January. The forecasts sent Next down by as much as 9pc.

As well as weaker sales, the company must pay a higher rate of corporation tax from next month. The headline rate is scheduled to rise from 19pc to 25pc.

Lord Wolfson called for the Government to be clearer on what level taxes would be set at in the longer-term.

The Conservative peer said: "Whilst we can justify this idea that we need to pay for some of the support that came during the pandemic, where we are going forward relative to other countries will be important for the wider economy.

"I'm not sure that this level [of tax] is the right level but the Government hasn't told us what its long term aspirations are for corporation tax, which would be helpful."

Talk of inflation starting to soften will come as a boost for shoppers and the retail industry, which has been battling sliding sales. Figures out from the Office for National Statistics last week suggested that more people were visiting second-hand stores and auction houses as the cost of living crisis puts intense pressure on budgets. Grocery price rises last month hit a record high, forcing people to make cut-backs elsewhere.

Sliding sales have led to the collapse of a number of well-known fashion and furniture brands, including Joules, Made.com and Cath Kidson, all of which Next has bought out of administration.