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Fashion retailer Next has said it remains cautious about the outlook for trading, amid fears consumer activity could be hit by higher mortgage costs.

In an interim management statement today the high street chain said its sales over the past eight weeks had shown a "significant improvement" on the previous six weeks, but warned that trading patterns remain "extremely volatile".

Next said combined sales for its stores and the Next Directory catalogue were up 0.4 per cent year-on-year in the 14 weeks to November 3rd.

However growth was driven by the performance of the Next Directory, which saw sales climb by 1.2 per cent over the period.

In contrast sales across Next's stores remained flat in comparison to last year, while like-for-like sales across 301 outlets unaffected by new openings fell by 2.9 per cent.

Next said good sales levels recorded for September had given way to a "disappointing" October.

"Whilst we are happy that we have made significant improvements to our product ranges, marketing and stores we remain cautious about the consumer environment, with many customers now experiencing considerable year on year increases in their mortgage repayments," the retailer stressed.

Nonetheless Next still expects its full-year profits to be in line with market expectations.

The company is the latest retailer to express concern about conditions on the high street, with concern growing about the impact that past interest rate rises are now having on consumer sentiment.

According to research published by the British Retail Consortium (BRC) yesterday conditions for retailers were at their worst for 11 months in October, when like-for-like sales across the sector grew by just one per cent on an annual basis.