Next has posted some good half year results with pre-tax profits of £228 million to July, an increase of some £18 million.

This comes despite the company passing on the rising costs of cotton and fuel directly on to the customers.

Although Next then saw a fall in demand and sols fewer items the increased prices more than made up for it.

Next has also been seeing strong results from its catalogue and online offering, which have gone a long way to boost performance. But the stellar performer was its international sales.

The company seems to have seen off what its chief executive, Lord Wolfson, called a ‘perfect storm’ of rising prices and a squeeze on consumer discretionary spending from food and fuel inflation as well as stagnant wages. This is being seen in some quarters as an indicator that the worst may be over for the high street retailer.

Lord Wolfson expects there to be headwinds but says that these should ease by next year as the cotton price bubble bursts. "It seems reasonable to believe that by the second quarter of next year we will begin to see some recovery." He said.

But it should be remembered that this is a good result for Next but not necessarily for the high street as a whole. The money people spend with this company from an ever diminishing discretionary spend is money they are not spending elsewhere.

There is no indication at present that the government is changing course, so there is unlikely to be a surge in cash for people to spend next year. The likelihood is that overall there will be less for people to spend.

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