PRIMARK owner Associated British Foods has pledged to freeze prices despite rising costs from inflation.

The company estimates that inflation increased costs across the group by some £1 billion in this year alone, it told the City in its annual results.

The business has promised to not add any further price rises to those already announced before next year's autumn/winter collection launches.

George Weston, ABF chief executive, said: “Looking ahead, substantial and volatile input cost inflation will be the most significant challenge in the new financial year, and our businesses will continue to seek to recover these higher costs in the most appropriate way.

“Primark has faced significant input cost inflation and sharply moving currency exchange rates. We have decided to hold prices for the new financial year at the levels already implemented and planned and to stand by our customers, rather than set pricing against these highly volatile input costs and exchange rates.

“As a result, in the current financial year, we expect significant growth in group sales from pricing in food, as well as from some pricing and from space expansion at Primark.”

Mr Weston said that prices have already increased by the low single percentage digits for Primark's products. Around 50% of products have gone up in price, and the children's ranges have been the least impacted.

The business said revenue jumped by more than a fifth to £17 billion in the year to September 17, as pre-tax profit increased by nearly half to £1.1 billion.

The food business is expected to grow sales significantly this year as it hikes prices for customers, and ABF will also bring in some extra cash from the already planned price rises at Primark.

However, adjusted operating profit is expected to fall as the business faces cost increases.

It announced an 8% increase in dividends to 43.7p per share, and promised to buy back £500 million in shares from investors.

Shares were up around four per cent in early trading.

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