Next warns of 8pc hike in clothing prices

Next has warned customers that clothes prices could rise by as much as eight per cent in the new year as the cost of cotton continues to rise.

Chief executive of the retailer Lord Wolfson said: "While there has been a 45 per cent rise in the price of cotton it accounts for only something like seven per cent or eight per cent of garment costs. But we have also seen some pressure on capacity and rising wages in the Far East.

"Add those together with the rise in VAT in January and retail prices rises are likely to be at the top end of our earlier five per cent or eight per cent forecast."