British retailer Next and Swedish fashion group H&M have signaled that they may raise product prices in the coming months if elevated costs stemming from the ongoing Middle East conflict persist, as European retailers grapple with inflationary pressures and weaker demand.
Next, the UK’s biggest clothing and homeware retailer, said it has already factored in about £15 million ($20 million) of extra costs from higher fuel and air freight expenses due to disruptions linked to the conflict. While the company has so far absorbed these increases through internal savings, Chief Executive Simon Wolfson warned that price rises could be necessary by mid‑2026 if the situation continues. The retailer expects prices could rise by around 1–2% by summer, with the risk of further increases of up to 5–10% later in the year should manufacturing and logistics costs climb further.
Wolfson’s comments came as Next reported a 14.5% increase in pretax profit to £1.158 billion, slightly raised its profit guidance for the year ending January 2027, and noted slowing sales growth in the UK and sharply lower sales in the Middle East, which accounts for about 6% of turnover.
Also Read: Australia’s Fashion Industry Goes High-Tech to Revive Local Manufacturing
Meanwhile, H&M flagged the potential for inflationary pressures to affect consumers and pricing decisions if the conflict in the Middle East persists. Although the fast‑fashion group reported a 26% jump in first‑quarter operating profit to 1.51 billion Swedish crowns, Chief Executive Daniel Erver cautioned that continued disruptions could translate into higher costs for energy and supply chain inputs, which would put pressure on both margins and consumer spending.
H&M noted that while demand has not yet fallen sharply, rising costs linked to higher energy prices and inflation could weigh on consumers over time. The company said that its relatively limited exposure to Middle Eastern operations and reliance on sea and land shipping have so far limited immediate disruptions, but lingering uncertainty could lead to higher prices on apparel and other goods if cost pressures cannot be absorbed.
The warnings from Next and H&M come as broader retail price inflation in the UK continues to edge up, with higher costs from international shipping and energy feeding into shop pricing, according to industry figures.
Analysts said that retailers face a delicate balancing act between passing on higher costs to consumers and maintaining demand in the face of weakening consumer confidence. Higher crude oil prices and logistical disruptions through key trade routes have amplified cost pressures, particularly for highly competitive sectors such as apparel retail.
