New Look yesterday became the latest fashion retailer to warn that the rising cost of cotton and the hike in VAT will lead to higher prices next year.

It issued the warning as it unveiled figures showing like-for-like sales at its UK stores slipped to a 4.5 per cent decline in the past half-year, compared with growth of 7.5 per cent in the same period the previous year.

Chief executive Carl McPhail said he expected like-for-like sales to remain subdued going forward. Fashion retailers Primark and Next have also warned in recent weeks that a near doubling in the price of cotton and January’s increase in VAT from 17.5 per cent to 20 per cent will lead to price hikes.

New Look said its like-for-like sales in the half-year had been impacted by “personnel disruption” caused by moving its buying, merchandising and design teams from its Weymouth head office to central London last year.

Its share of the UK fashion market increased from 5.7 per cent to six per cent in the period, helped by the opening of 16 UK stores in the previous year.

Group sales were up 3.2 per cent, driven by a strong performance overseas and from its websites.

New Look abandoned plans to float on the stock exchange in February, blaming the retreat on turmoil in financial markets.