The boss 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 retail giant, seen as a bellwether for the sector, said yesterday 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."
Next had previously said it expected to raise prices by 8% in the first half of 2023 and a further 6% in the second half of the year.
However, on Wednesday, the company cut that guidance.
Price increases
Next is now preparing to increase prices by 7% in the first half of the year and 3% 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 told the Telegraph: "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, he 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 1.5% this year.
Shares closed last night down more than 4%.
Wait and see
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 £795million this year, compared to £870million in the 12 months to January.
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 19% to 25%.
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.
Long-term aspirations
"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.