The boss of high street clothing chain Next today offered reassurance that prices will not rise further in 2012 after a "perfect storm" of surging costs and rising VAT increased price tags this year.

The retailer, which has more than 500 stores in the UK and Ireland, hiked average selling prices by 7% in the six months to July 31 as soaring cotton and oil costs added to the VAT hike to 20% in January.

Next expects selling prices to increase 8% in the second half of the year but chief executive Lord Simon Wolfson said there will not be further rises in the first half of 2012 as the cotton cost bubble has burst, with prices falling 50% below their March peak.

The reassurance came as Next reported a 1.8% drop in store sales, which was offset by a 15.1% increase at its online business Next Directory.

The company posted an 8.5% increase in half-year pre-tax profits to £228m after revenues grew 3.6% to £1.6bn.