Leading retailers warn of further pressures
Retailers face as much as£10 billion in extra costs this year, as many struggle to maintain profitability in the face of harsh trading conditions and deflationary pressure.

M&S boss Stuart Rose, who posted a 2.9 per cent Christmas comparable sales uplift, said the rising costs of fuel, utilities, rent and rates are likely to bite. Mothercare boss Ben Gordon said the rises are 'an issue for all retailers'. He added staff costs to Rose's list.

Their warning followed that of Tesco's Sir Terry Leahy, who disclosed last autumn that oil-related costs alone were likely to be£60 million above budget this financial year.

Consultancy Verdict fears retailers face extra costs of£10 billion this year. The BRC said energy costs have risen by as much as 50 per cent since October. Service charges are likely to rise by 7 per cent on average this year, rent by 4 per cent, or£1 billion, and rates have risen by 9.6 per cent, or£500 million, in 2005/2006.

The cost rises came in the face of ongoing price deflation, BRC figures reveal. Non-food prices are now 1.4 per cent lower than last year.