Primark, the standout success story of British retailing over the past five years, admitted yesterday that its own brand of cheap and cheerful fashion is being hit by the consumer slowdown.

Associated British Foods (ABF), the chain's parent company, said that the tougher economic climate had put the brakes on the business as shoppers juggle the rising cost of food, petrol and higher energy bills.

Like-for-like sales at the cut-price clothing chain that has transformed the clothing market were only “broadly flat” in the 16 weeks to June 21, compared with year-on-year growth of 4 per cent in March.

John Bason, the finance director of ABF, insisted that Primark was outperforming its rivals and was continuing to prise market share from Marks & Spencer. However he conceded: “We think the slowdown will continue and it will affect us around the edges.”

Shares in ABF fell by more than 3 per cent to 738p after the trading update. Primark accounts for more than a third of the group's profits. The figures came a day after PricewaterhouseCoopers, the accountants, said that the soaring cost of living in Britain was hitting the poorest hardest. Ernst & Young claimed this week that the average family was 15percent worse off than five years ago.

Freddie George, retail analyst at Seymour Pierce, said that Primark's performance also suggested that better-off consumers were choosing to buy higher-quality clothing when they decided to spend. He said: “The era of ‘throwaway' fashion appears to be coming to an end and it may be the consumer is now buying less but trading up.”

Mr Bason admitted that Primark had been hit by the poor weather in April but said that the chain had benefited from a “bounce-back” in May and June.

He added that Primark had not been affected by the fallout from last month's BBC Panorama programme, which showed that three of the company's Indian suppliers had been using child labour for embroidery work.

Primark sacked the three suppliers before the programme came out but a survey by Drapers, the fashion industry magazine, showed that 42 per cent of shoppers would think twice about shopping at the chain. Mr Bason said: “I have perceived no negative effects from the Panorama programme. We have a good ethical policy.”

Including new store openings in the past year, total sales at Primark were up 14 per cent on a year ago in the 16 weeks.

Greg Lawless, retail analyst at Blue Oar Securities, said: “M&S would give their right arm for the kind of figures Primark have produced.”

M&S revealed last week that it suffered a 6.2 per cent fall in like-for-like sales of general merchandise - clothing and homewares - in the 13 weeks to June 28.

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