Sir Philip Green believes that the recent collapse in the pound could trigger a “double dip” on the high street next year as clothing retailers struggle with the toughest inflationary pressure for more than a decade.

In an interview with The Times, the Bhs and Topshop billionaire said that, after a year of spiralling food price inflation, price increases were inevitable in non-food products as the cost of importing clothing soared.

Sir Philip said: “For the first time, on top of everything else, we are now seeing fairly reasonable, fairly significant cost-price inflation and that could change the landscape totally. There's been a very sudden and serious devaluation of the pound and there's now a real risk of a double dip - of us facing even tougher conditions - next year.”

The warning will put yet more pressure on the Bank of England to leave interest rates unchanged, despite the risk of a recession. Sir Philip said: “I'm no economist, but a period of stability is probably the safer option as things stand.”

The pound has fallen by almost 8 per cent against the US dollar in recent weeks and to a record low against the euro, putting huge pressure on clothing retailers that source most of their product overseas.

At the same time, clothing suppliers across Asia and the Far East are asking for price rises of up to 10 per cent to cover higher energy costs and rising wage bills.

Sir Philip said that clothing retailers would have little choice but to pass the higher prices on to consumers, given that most companies have made their supply chains as efficient as possible.

“All the suppliers have been squeezed, all the levers we can pull have been pulled,” he said. “There's no back door out of here.” He expects most price rises to come through in three to six months, as retailers' hedging positions on the dollar expire.

The clothing sector has been one of those hit hardest by the slump in consumer spending. A number of mid-market chains have gone into administration, such as Ethel Austin and MK One, and Marks & Spencer issued a profit warning in July.

Sir Philip is attending New York Fashion Week today in a visit that marks the countdown to the opening of his first Topshop in the United States, in New York, in November.

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