The warnings have started to come thick and fast. Inflationary pressures and the decline in the value of sterling are putting pressure on price.

Next boss Lord Wolfson was one of the first to warn that the inevitable effect would be that shoppers would have to pay more for their goods, although he was sanguine that the extent of increases would be bearable.

In the last few weeks it has become clear that it is not only fashion retailers that face the possibility of putting prices up.

There was push and shove between Tesco and FMCG giant Unilever over the price of high-profile products such as Marmite after the supplier demanded a 10% across the board rise, rejected by the grocer.

Then tech powerhouse Apple increased the prices of some of its products, such as laptops, to UK consumers – a decision reflective of factors such as exchange rate volatility.

Here we look at what further changes can be expected and the implications for retailers.

What level of price rises are expected next year?

Next envisages a 5% increase in cost prices next year. The same rise in the retail selling price would spark a like-for-like sales dip of between 0.5% and 1%, as well as a 5.5% drop-off in unit sales.

But Next said the “drag on sales is manageable and less damaging than taking a significant hit to margin”.

Despite refusing to countenance Unilever’s demands, Tesco chairman John Allan has acknowledged it is “very likely” that British shoppers will nevertheless face higher prices.

While he rejected the idea that food prices might climb by as much as 10%, he thought inflation generally might reach 2% or 3%.

However toy specialist The Entertainer’s chief executive Gary Grant does think prices could go up by 10% next year in the wake of the Brexit decision.

“When currency is adding 20% onto the price of goods there is pressure to put prices up”

David McCorquodale, KPMG

He believes that may not be an insurmountable issue, but it would be effected by whether consumers have more money in their purses, which is uncertain.

KPMG head of retail David McCorquodale believes prices will go up between 5% and 10%.

He says: “There’s been a big focus on cost anyway. The national living wage has already added 5% to 7% onto the wage bill.

“Retailers might be able to absorb that without putting prices up but they’re taking out headcount and better optimising their business. But when currency is adding 20% onto the price of goods, there is pressure to put prices up.

“Luxury retailers have already done it. There were lots of tourists coming here to get a bargain.

“They’ve started to put prices up for global parity. It’s not good to have shoppers flocking to one country for lower prices.”

Prices vary by sector

Shore Capital’s Clive Black observes: “We import a lot of homewares, electricals, so I don’t think it will just be fashion driving inflation.

”However in fashion you have to overlay what’s going to happen with weather – the doomsday scenario is that a lot of unsuitable things are imported and don’t sell because we have a single season year again.”

McCorquodale thinks fixed price retailers face a particular problem.

He says: “They’ll be working with suppliers to adjust the size of products – they’ll be taking a triangle off a bar of Toblerone.”

He also fears fashion specialists, who have already suffered amid torrid conditions, will find things tough.

He says: “Primark has already said it won’t pass on price increases to the consumers. We’ll be seeing slightly thinner cotton.

“Primark has already said it won’t pass on price increases to the consumers. We’ll be seeing slightly thinner cotton”

David McCorquodale, KPMG

“Primark are well financed, so can do. Many others can’t.

“Fashion retailers need to work on where they source goods from and make sure products are fashionable.

“We’re going through a bland [fashion] stage right now. Retailers are playing it safe and are bringing in products they know they can sell throughout the year.

“Fashion retailers need to get a point of difference and make sure their brand stands for something.”

In electricals, prices are already rising, according to price comparison site Kagoo.

Since the EU vote, the average price of TVs has increased 11.8% (£88.80), while vacuum cleaners have risen 11.3% (£23.74). 

In grocery, McCorquodale expects that retailers will seek to create more efficient supply chains, but food not made in the UK will have to go up in price.

“We’ll see a battle in grocery to be the most efficient and we might see consolidation in the supplier base next year,” he says.

Meanwhile, Andrew Pearl of price monitoring specialist Profitero says retailers “must be wary of applying a blanket price rise across all product ranges” as “shoppers are used to prices falling”.

What will shoppers accept?

“With the narrative that abounds at the moment, most shoppers are aware that there is a decision that is taking place on how much inflation to pass through, so shoppers will not be surprised that that is the case,” says Black.

“How they behave is another matter. If there is rampant inflation against wages going up marginally then consumer behaviour will be a challenge for everybody.”

He concludes: “Retailers will be absorbing movements and so will manufacturers, but consumers will too. The inflation will be shared.

“If retailers put too much inflation through, we will see start to see shopper behaviour change and trading down will start to happen. I don’t think anyone wants that.”

“Retailers will be absorbing movements and so will manufacturers, but consumers will too. The inflation will be shared”

Clive Black, Shore Capital

In some categories – such as fashion, toys and games, and baby products – shoppers are willing to accept “small” price increases, according to Pearl.

He says consumers will accept these increases if “the brand provides them with a high level of value and quality”.

But he says general shoppers are “far from being ready to accept price rises”, particularly as they have got used to seeing falling prices in grocery.

Meanwhile, McCorquodale advises retailers against blaming Brexit for price increases.

“Many of those voters will be your customers.

“You can talk about currency changes but not Brexit – that’s like saying ‘you bloody idiots, what have you done?’”

What’s the most sensible pricing strategy to take?

McCorquodale says that retailers should take a leaf out of the books of budget airlines.

“They should keep the prices of goods down as low as they can but, like those airlines, charge for extra legroom and added value services,” he thinks.

He highlights John Lewis’s decision to charge for click-and-collect last year as a good example of such an approach.

“Retailers have much to lose in terms of the wafer-thin loyalty of their shoppers”

David McCorquodale, KPMG

Profitero’s Pearl says the positive reaction Tesco won during the Unilever row shows that retailers have much to gain by “appearing to represent the interest of shoppers”.

But he warns: “Clearly this will get harder as further brands are forced into driving through similar price increases.

“The most sensible strategy for retailers currently is to continue to highlight how they can help their shoppers avoid having to spend more money during this time of great uncertainty.

“Retailers have much to lose in terms of the wafer-thin loyalty of their shoppers if they start to raise prices ahead of their competitors.”