Primark to keep a lid on price rises as sales surge

Primark ratcheted up the pressure on rival retailers yesterday with a pledge to keep its prices down, even as other fashion chains warned of price increases to offset soaring costs.

John Bason, the finance director of Primark's parent company Associated British Foods, said: "Primark is going to remain the best value on the high street."

However, he admitted that, as it sells a huge range of items, the prices of some products may go up.

Primark brushed off December's snowfall to report a surge in festive sales. However, its pricing strategy means that its operating margins are likely to come under pressure in the second half from increased costs, including the rise in VAT, soaring cotton prices and record freight charges.

Other retailers, from Next to New Look, have warned that clothing prices will rise by up to 10 per cent to combat increased supply chain costs.

In the 16 weeks to 8 January, sales at Primark rose 12 per cent, boosted by new stores in the UK, the Netherlands and Germany. Analysts said its like-for-like sales jumped by 4 per cent. Primark will open six stores this financial year, bringing its total to 220 by mid-September, and plans to step up its expansion plans from the autumn.

Group sales at ABF, the owner of brands from Ovaltine to Kingsmill bread, rose 10 per cent in the period. But its sugar division warned that the cold weather had had an an "adverse effect" on the quality of UK sugar beet.