TYPICALLY early in the raft of Christmas trading statements from the high street, retailer Next is always one to watch. It has, over the years and decades, tended to be a bellwether.

In this regard, it was interesting to see an unexpected year-on-year decline in Next’s sales over the period from November 1 to December 24. Next brand full-price sales were down 0.4 per cent year-on-year over this period. The retailer had expected an increase because the comparative numbers in 2015 were “poor”.

Even more interesting, in turbulent economic times such as those we face in the wake of the Brexit vote, were the company’s latest projections of what is likely to come next.

The retailer flagged two key factors likely to depress sales revenue. It underlined the possibility of a further squeeze in general household spending as the rise in annual UK consumer prices index inflation following the vote to exit the European Union erodes real earnings growth. And it forecast rises of up to five per cent in clothing prices.

Summing up, in terms at odds with the Brexiters’ red, white and blue-tinted world view, Next said: “The year ahead looks set to be another challenging year; therefore we are preparing the company for tougher times.”

Scottish Chambers of Commerce has this week also highlighted inflationary pressures, which have arisen from sterling’s tumble in the wake of the June 23 Brexit vote. The pound’s drop has hiked import prices and fuel costs.

Garry Clark, head of Scottish Chambers of Commerce’s economic development intelligence unit, said: “The cost pressures are definitely a factor across the board. That has been consistent across the past couple of quarters.”

He noted retailers had told Scottish Chambers that inflationary effects would really become apparent when new season stock came in. He flagged challenges for retailers in passing on cost increases to consumers, given real wages did not look as if they were

going to be growing much in the foreseeable future.

His comments came after a survey

by British Chambers of Commerce, published this week, underlined intense inflationary pressures.

The British Chambers survey revealed a surge in the proportion of companies intending to raise prices.

Subtracting the proportion forecasting a fall in prices for their goods and services over the next three months from that predicting a rise, a balance of 52 per cent of manufacturers and a net 30 per cent of services firms projected an increase. This is a record balance for manufacturing, and the highest reading for services firms since the first quarter of 2011.

Cost pressures, not just for retailers but for other service sector companies and manufacturers, have been writ large in a raft of surveys this week.

While a survey from the Chartered Institute of Procurement & Supply yesterday showed the fastest monthly growth in UK services sector activity since July 2015 in December, it also underlined the scale of the inflation problem. These huge inflationary pressures are likely, against a backdrop of weak pay growth and a projected rise in unemployment, to put a significant dampener on already unimpressive economic expansion.

The survey from CIPS showed UK services companies’ input costs rose at the second-fastest monthly rate since April 2011 in December, noting this jump was “linked to the weak pound”.

CIPS said that higher food and fuel prices were mentioned widely by services companies, “while labour, IT and oil-based items such as packaging were also cited as being up in price”.

As a result, service providers last month raised their own charges at the fastest rate since April 2011.

Other surveys from CIPS this week have highlighted intense cost pressures in manufacturing and construction.

So, only a few days into the New Year, we have yet more evidence, if any were needed, that rising inflation will be a key economic theme in 2017.

Another key theme looks likely to be a continuing shambles around the Brexit negotiations from a UK Government that still seems entirely bereft of a credible plan.

The Conservative Government has suffered another setback this week with the unexpected resignation of Sir Ivan Rogers as UK ambassador to the European Union. Sir Ivan’s farewell email to staff seemed to speak volumes about the current state of affairs.

He wrote: “I hope you will continue to challenge ill-founded arguments and muddled thinking, and that you will never be afraid to speak the truth to those in power.”

This guidance is astute indeed. We appear to live in a time when too many of the electorate, in terms of the UK Government’s all mouth and no trousers approach to Brexit, cannot yet see that they are being duped in an “Emperor’s new clothes” fashion. So it is important that the reality of the situation is shouted from the rooftops.

Households are probably only just starting to feel the effects of rising inflation but will be increasingly aware that already stretched budgets will become even more strained this year.

The path of inflation in the wake of the Brexit vote will present a very major economic challenge, as well as inflicting a social cost, at a time when confidence looks likely to be tested to the limit with the triggering of Article 50 to begin the formal EU exit process. We are assured by Prime Minister Theresa May

that Article 50 will be triggered, one

way or the other, by the end of this quarter. Whether there is a plan or not, it seems.

Brexiters in the Conservative Government should be able to see for themselves the “truth”, in the economic statistics and forecasts and in the fears of households and businesses. However, it seems at the moment that they are not looking hard enough, or that they just do not want to recognise it.