Shops pay for higher prices Store chiefs braced for tough Christmas

HIGH street bosses face a nightmare before Christmas – with costs soaring but shoppers cutting back, experts warn.

Retailers sold 0.8% fewer goods between August and September, figures out yesterday from the Office for National Statistics revealed.

Samuel Tombs, of Pantheon Macroeconomics, said: “The slump was driven by retailers implementing large price rises.”

Shop prices rose at the fastest rate since 2012 in September – up 3.3% in the past year.

The jump was fuelled by the weak pound since last year’s Brexit vote which has pushed up the cost of imports.

Rising prices and weak wage growth explain why households have begun reining in spending. It’s left store chiefs with the dilemma of whether to keep putting prices up to claw back rising costs, just as shoppers are tightening their belts.

The pressure on households could get worse if the Bank of England ups its base rate next month, raising borrowing costs for many people.

This potentially toxic combination comes as stores gear up for Christmas – for many a crunch time of year.

Ian Gilmartin, of Barclays Corporate Banking, said: “Retailers will have to make difficult decisions about the extent to which they are able to discount in the run-up to Christmas to encourage consumers to part with their cash.”

The ONS figures show the annual growth in sales by volume slowed to 1.5% between July and September. By value, sales jumped 4.7%.