Retail firms are warning that the conflict in the Middle East is driving up costs and could lead to price hikes if the war continues beyond the short term. 

Instability in the Middle East region will not only restrain growth in the region but is also likely to have a knock-on effect on costs, selling prices, and consumer demand in the rest of the business, warned British retailer Next on Thursday. 

The company has accounted for £15 million ($20 million) of additional costs likely to arise from the conflict, such as fuel and air freight, assuming the disruption lasts for three months. Increased costs will…