Primark-owner Associated British Foods (ABF) has said that it will not increase its prices despite experiencing inflation-related costs worth £1 billion this year.

The group's chairman Michael McLintock described the economic conditions of the past 12 months as the "most challenging" in many years, with the business facing sharply rising inflation and "highly volatile" input costs.

Primark recorded a sales increase of 43 per cent to £7.7 billion during 2022, as customer behaviour returned to normal after the pandemic.

While sales were strong in the UK and Ireland, they were weaker in continental Europe. The budget fashion retailer attributed lower sales in the region to "cautious customer sentiment".

In September, ABF warned that profits at Primark are likely to decline over the next year amidst the cost-of-living crisis.

Given these pressures, it said, Primark’s operating profit margin across the next financial year is now expected to be lower than the second half of 2022.

ABF’s chief executive George Weston said that volatile cost inflation will be the most significant challenge next year.

In April, despite strong sales growth recovery, Primark told customers it would increase prices due to the 30-year high inflation rate.

But Weston assured customers that while Primark faced “significant” input cost inflation and sharply moving currency exchange rates, the retailer has decided to keep prices for next year the same and not roll out any further increases.

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