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Next chief warns of higher clothing prices

In a worrying development for the UK high street it has been announced that Next, the leading UK clothing retailer, expects the cost of clothing on the high street to increase in the short to medium term. The main reason for the forecast increase is the fall in the value of sterling against the dollar which is now making imports more expensive, the cost of which will need to be passed on to the consumer.

This is probably a worst case scenario for the UK high street as it will see prices increase as demand falls and is highly likely to push a great number of clothing retailers to the wall. As a time when the industry needs to be competitive the substantial fall in the exchange rate between the dollar and the pound is set to have a major impact.

UK retailers now have a dilemma, do they maintain or reduce prices in order to attract business (thereby reducing their margins), or do they charge the going rate for the products and hope that consumers flock back in due course. The situation over Christmas will become critical for many and there are real concerns for the UK high street as we move towards 2009.

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