Scott Wright: What will cost of living crisis mean for Scotland's embattled towns and cities?

But even though Next, which is forecast to make an underlying pre-tax profit of £822 million for the year to January 31, looks to have performed better than most during the pandemic, the company gave notice of significant headwinds in the months ahead.

Next warned that the well-documented squeeze on global supply chains, which has driven up manufacturing and freight costs, and soaring wage inflation will mean that the prices it charges for its goods will rise in the year ahead. The warning seemed to spook investors, who sent shares tumbling by three per cent on the day.

That one of the country’s biggest retailers will be putting up the price of clothing was a further sign of the cost of living crisis that is exerting an ever-tightening stranglehold on UK households. Huge hikes in energy bills will be charged when the current price cap is lifted, and the increase in national insurance contributions take effect in April. Prices at the petrol pump have also rocketed in recent months.

READ MORE: Scott Wright: Omicron has renewed tension between business and Scottish ministers, but does it have to be this way?

Next, which flagged its intention to raise prices by 4% for spring and summer collections and by 6% for autumn lines, is not alone in sounding the alarm over prices.

Last week, the latest quarterly economic survey by British Chambers of Commerce, covering the fourth quarter of 2021, found 58% of firms expect to increase their prices in the next three months amid what were described as “unprecedented inflationary pressures”.

The survey found 77% of production and manufacturing firms, 74% of retailers and wholesalers, 72% of construction firms, and 69% of transport and distribution firms expect to put prices up in the next three months.

Asked why they were under pressure to lift prices, 94% cited raw materials, 49% highlighted other overheads, 30% identified pay settlements, and 13% cited finance costs.

For consumers and households, there is no sign of the pressure easing.

Annual consumer prices index inflation climbed to 5.1% in November from 4.2% in October, taking it to the highest 12-month rate since September 2011, and it is expected by the Bank of England to peak at 6% in April.

READ MORE: Scott Wright: Stagecoach sale is a further blow to Scottish prestige

Beyond sectors where skills are in severely short supply, the salaries of most people will not be rising at anywhere near that rate. It means more and more people are now weighed down by financial worries in addition to the health concerns we hold as the Omicron variant approaches its peak, nearly two years into a draining and all-encompassing public health crisis. The consequences for mental health do not bear thinking about.

With concern over the cost of living beginning to dominate the political agenda, the pressure is growing on Prime Minister Boris Johnson to formulate ways to minimise the impact on households. Calls have been made (and thus far rejected) for value-added tax to be removed from energy bills before the price cap is increased in April, which some fear will result in a doubling of bills, and for the forthcoming NI increase to be reversed.

Ministers will be aware that failure to act could well come back to haunt them at the ballot box at local elections in May.

But while attention has rightly focused on how runaway inflation is impacting consumers, there are broader economic implications too, including for the recovery of towns and city centres which continue to be blighted by the pandemic.

Urban centres such as Glasgow have yet to see footfall return to anywhere near pre-pandemic levels, with the continuing advice for people to work from home if they can a major impediment on the road to recovery. There remains a haunted look about the city which feels like it has been robbed of its indomitable spirit, a feeling that has certainly not been helped in recent weeks by the reintroduction of measures to combat the Omicron variant.

READ MORE: Scott Wright: Festive cheer has been ripped away from hospitality trade, but is government doing enough to help?

And of course it is not just Glasgow that has seen its vibrancy wrecked by Covid. Hospitality outlets across the country saw hopes of strong festive takings dashed when Public Health Scotland and then the Scottish Government advised people not to attend Christmas parties. Current restrictions, including the three-week closure of nightclubs and the requirement of social distancing and table service in pubs, mean trade continues to be muted. Many outlets have had to close because of staff shortages due to illness.

The chill wind of Omicron has swept through the country’s retail sector too. Figures released by the Scottish Retail Consortium last week showed that footfall plunged in the crucial pre-Christmas period, when people were again advised to work from home and physical distancing was reintroduced in stores.

Scottish footfall decreased by 22.8% in the four weeks from November 28 to January 1 compared with the same period two years ago, denting retailers’ hopes of a strong festive spell of trading that could have helped them make up the ground lost since the pandemic began.

Underlining the challenges, a snap poll by Aberdeen & Grampian Chamber of Commerce, published this week, found that 31% of its members were at moderate or high risk of collapse if the current restrictions are strengthened or extended beyond January 17. More than 40% said they would have to cut jobs if the curbs continue.

Scottish ministers have responded to the impact of the latest Covid restrictions by making emergency funds available to the businesses affected. They have allocated £375m in emergency funding, which will hopefully be filtering through to firms’ bank accounts now.

While financial support will always be welcome, it is increasingly obvious that, at a time of soaring costs and heavily reduced footfall, the only answer to the woes facing so many firms will be the lifting of the current restrictions. Without that, it is very likely that we will see more businesses fail.

Encouragingly, the first signs of progress on this front were made on Tuesday. First Minister Nicola Sturgeon gave the green light to the resumption of full-capacity crowds at large sports events, including top-flight Scottish football matches on January 17, sparking hope that restrictions will begin to ease in sectors such as hospitality soon.

Meantime, any imaginative measures that could help tempt people back into town and city centres must also be given serious consideration.