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By Paul Sandle and James Davey
LONDON, Jan 6 (Reuters) - Three leading British retailers on
Thursday underscored the threat they face from inflation this
year, with their bosses fretting over the need to remain
competitive as surging prices threaten customer spending power.
Next, Britain's most profitable clothing retailer,
said it expected higher freight and manufacturing costs to push
its prices up by 6% in the second half of 2022, raising doubts
as to whether customers' wages would be able to keep up.
The Bank of England expects overall consumer price inflation
to hit that figure in April, its highest since 1992, before
easing off.
Next boss Simon Wolfson told Reuters the gap between general
wages and its prices would largely determine the company's
fortunes in 2022.
"The positive for retail is that we can adjust our pricing,"
he said. "So if wage inflation is in line with our price
increases - I don't think it will be, but if it is - then it's
not going to be nearly as much of a problem as if wage inflation
is a long way behind."
Greggs, a food-to-go retailer, said its costs were
driven by government-mandated hikes to the minimum wage, and the
rise in prices of ingredients. With order contracts in place, it
has visibility for the next four to six months.
"This year is a more challenging year than most because
you've got inflation coming at you from both the ingredient side
and from the labour side," outgoing CEO Roger Whiteside told
Reuters.
He said that while Greggs had, and would try, to push
through small price rises, the group had to be cheaper than
rivals.
B&M, a discount retailer that has performed
strongly during the pandemic, upgraded its profit forecast on
Thursday. But it tempered its upbeat tone with an
acknowledgement that 2022 would bring further supply chain
disruption, inflationary pressures and uncertainty from
COVID-19.
Rising inflation is the major cloud on the horizon for the
global economy, as supply chain disruption, higher energy costs,
labour shortages and a post-lockdown revival in demand for goods
pushes up prices at rates not seen for decades.
That will all place additional pressure on consumer spending
after years of stagnant wage growth in real terms. In April,
British consumers will face a rise in taxes and energy bills.
They are also facing higher food prices. Grocery price
inflation reached 3.5% in December, its highest since spring
2020, adding nearly 15 pounds ($20) to shoppers' average monthly
grocery bills, according to industry data published on
Wednesday.
($1 = 0.7392 pounds)
(Writing by Kate Holton; editing by John Stonestreet)
