Clothing prices are beginning to rise in the US as Donald Trump’s tariffs on imported goods start to have an effect, according to the boss of H&M, one of the world’s biggest fashion retailers.

Daniel Ervér, the chief executive of the Swedish retailer, said: “In the US, we are starting to see some competitors increasing prices. Different competitors are acting in different ways. Some more aggressively and some more cautiously.”

He said it was unclear how the market would develop as there was a “fast-moving situation” on tariffs, as the Trump administration had changed the rules on several occasions. Nevertheless, Ervér said H&M was aiming to be “very, very competitive” on price, fashionability and sustainability.

He said the group’s wide range of sourcing locations meant it had “good flexibility” to mitigate the impact of any tariffs imposed by the US on goods imported from certain countries so that it might have an advantage over some competitors.

Despite rising costs on wages, tariffs and other factors, H&M made clear there was pressure to keep prices down as shoppers were keeping a tight rein on their spending amid global turmoil and rising household bills.

Ervér said: “The customer is very price sensitive.”

The group, which owns brands including Cos, & Other Stories and Arket as well as its main chain, said it was likely to have to discount more than last year around the world in the coming months, as some retailers were already having to cut prices to prompt uncertain shoppers to splash out amid global events.

The comments came as H&M revealed that sales had risen just 1%, in local currencies, to 112bn Swedish kroner (£8bn) in the first half of the year as it closed 4% of its stores. Operating profit slid nearly 17% to 5.9bn Swedish kroner.

The group said it planned to close 200 of its 4,200 stores this year but would also open 80 new outlets including its first three in Brazil and stores in Venezuela.

The group is also trying to offset rising wage costs around the world with more use of self-checkouts in stores, using smart RFID (radio frequency identification) tags inside clothes to help scan in basketloads of items in one go.