LONDONMADRID, Sept 11 Reuters Zara owner Inditex, which was among the first fashion retailers to raise prices in response to surging inflation, is in a strong financial position as weakening demand for clothing puts pressure on the sector to lower prices, analysts say.

Inditex shares have risen around 64 over the past 12 months as the world39;s biggest clothing retailer successfully passed cost increases on to shoppers and reported record profit margins.

But after several U.S. retailers including Macy39;s and Foot Locker warned of weak consumer spending, fears of an economic slowdown have come back into focus. Investors will be watching for any signs of weakness in Inditex39;s firsthalf results on Wednesday.

I think companies will be more disciplined and will reduce pricing where they think they can gain volumes, said Fabio Di Giansante, portfolio manager at Amundi, which holds shares in Inditex.

Bank of America analyst Geoffroy De Mendez said Inditex could cut prices by 2 in its 2024 financial year, which runs to Jan. 31 2025, after the company raised prices by an estimated 5 in 2022 and 2 this year. On the U.S. site, a Zara tailored women39;s blazer costs about 129 while a pair of its relaxedfit men39;s pants sells for 70.

The reason why they can do it is because they have the highest margin on the street. If there39;s one company that can afford lower pricing, it39;s this one, said De Mendez.

Overall, analysts expect Inditex to report a 12 increase in sales…