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| Next and Morrisons predict end to Brexit-related price rises | Next and Morrisons predict end to Brexit-related price rises |
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| Two of Britain’s biggest retailers have signalled some respite for cash-strapped consumers by predicting that Brexit-related price rises would come to an end next year. | |
| Clothing retailer Next and supermarket chain Morrisons have both issued upbeat forecasts saying the impact of the weaker pound in driving inflation higher should start to diminish in early 2018. | Clothing retailer Next and supermarket chain Morrisons have both issued upbeat forecasts saying the impact of the weaker pound in driving inflation higher should start to diminish in early 2018. |
| Next had previously warned customers that its prices would rise on average by about 5% in 2017, as the collapse in the value of the pound since the EU referendum made imported goods and services more expensive. | Next had previously warned customers that its prices would rise on average by about 5% in 2017, as the collapse in the value of the pound since the EU referendum made imported goods and services more expensive. |
| Simon Wolfson, the chief executive of the fashion chain, said on Thursday that price rises would be about 4% this year, before easing next year. | Simon Wolfson, the chief executive of the fashion chain, said on Thursday that price rises would be about 4% this year, before easing next year. |
| “Next year price inflation looks set to work its way out of the system as the effects of the one-off Brexit devaluation of the pound begin to annualise,” he said. “Assuming no further movement in the value of sterling, in the first half of 2018 we expect price rises of no more than 2% and no price rises at all in the second half of 2018.” | “Next year price inflation looks set to work its way out of the system as the effects of the one-off Brexit devaluation of the pound begin to annualise,” he said. “Assuming no further movement in the value of sterling, in the first half of 2018 we expect price rises of no more than 2% and no price rises at all in the second half of 2018.” |
| Morrisons said the impact of higher inflation caused by a weaker pound would start to unwind towards the end of its current financial year in February 2018. | Morrisons said the impact of higher inflation caused by a weaker pound would start to unwind towards the end of its current financial year in February 2018. |
| Consumer budgets have been under increased pressure in recent months as prices rises faster than wages. Inflation rose to 2.9% in August from 2.6% in July, driven higher by the increased cost of importing fuel, clothes and food. | Consumer budgets have been under increased pressure in recent months as prices rises faster than wages. Inflation rose to 2.9% in August from 2.6% in July, driven higher by the increased cost of importing fuel, clothes and food. |
| The retailers made the comments after reporting results for the first half of 2017. Shares in Next rose by 11.5% in early trading, making it the FTSE 100’s biggest riser after it raised sales and profit guidance for the full year. | The retailers made the comments after reporting results for the first half of 2017. Shares in Next rose by 11.5% in early trading, making it the FTSE 100’s biggest riser after it raised sales and profit guidance for the full year. |
| The retailer said that while sales had fallen by 2.2% and pre-tax profit was down 9.5% in the first six months of the year, the outlook for trading had improved. | The retailer said that while sales had fallen by 2.2% and pre-tax profit was down 9.5% in the first six months of the year, the outlook for trading had improved. |
| Lord Wolfson said: “The first half of the year has been difficult and sales and profits are in line with our cautious expectations. However, our performance in the last three months has been encouraging on a number of fronts and whilst the retail environment remains tough, our prospects going forward appear somewhat less challenging than they did six months ago. | Lord Wolfson said: “The first half of the year has been difficult and sales and profits are in line with our cautious expectations. However, our performance in the last three months has been encouraging on a number of fronts and whilst the retail environment remains tough, our prospects going forward appear somewhat less challenging than they did six months ago. |
| “As a result, we are taking the opportunity to modestly upgrade our sales and profit guidance for the full year.” | “As a result, we are taking the opportunity to modestly upgrade our sales and profit guidance for the full year.” |
| Morrisons reported higher sales and profits for the first half of 2017, as it continues a turnaround programme under chief executive David Potts. | Morrisons reported higher sales and profits for the first half of 2017, as it continues a turnaround programme under chief executive David Potts. |
| Potts said that “a new Morrisons is beginning to take shape,” as like-for-like sales – stripping out sales at stores open for less than a year – rose by 3%. Pre-tax profit jumped by 40% to £200m. | Potts said that “a new Morrisons is beginning to take shape,” as like-for-like sales – stripping out sales at stores open for less than a year – rose by 3%. Pre-tax profit jumped by 40% to £200m. |
| “More solid results from Morrisons confirms the turnaround strategy under Dave Potts is bearing fruit,” said Neil Wilson, an analyst at ETX Capital. “The supermarket is in the middle of a turnaround that is producing results, although there is always work to do in this intensely competitive sector.” | “More solid results from Morrisons confirms the turnaround strategy under Dave Potts is bearing fruit,” said Neil Wilson, an analyst at ETX Capital. “The supermarket is in the middle of a turnaround that is producing results, although there is always work to do in this intensely competitive sector.” |
| Morrisons shares fell by more than 4%, despite the rise in sales and profit. | Morrisons shares fell by more than 4%, despite the rise in sales and profit. |