Tough times as inflation and VAT squeeze retail

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Retailers are in for a tough couple of months ahead, said the head of a Portsmouth shopping centre.

As reported yesterday, CPI inflation is now at 3.3 per cent, owing to the increase in the cost of food and clothing.

And with VAT increasing from 17.5 per cent to 20 per cent from January 4, things will get tougher for the high street, said Rhoda Joseph, centre manager for Cascades Shopping Centre in Commercial Road.

She said: 'The first three months are going to be tight by anybody's standards.

'But there's an element of: ''just get on with it''.

'They're facing shoppers who would be less inclined to spend money.

'But they will purchase if the product and price are right.

'It's just going to continue to be tight. But then we've been doing that for a while.'

Maureen Frost, of the Hampshire Chamber of Commerce, said further price rises could be a risk.

She said: 'We've had a period of years where retailers have discounted significantly, and now their margins need to go back up. You can't sell at a loss.'