Prime Minister Gordon Brown has announced that the national minimum wage will rise by almost 4 per cent to £5.73 in October.

Since its introduction in 1999, the minimum wage has climbed by 60 per cent. The latest rise is a blow for retailers, which already face mounting costs in the midst of a consumer slowdown.

British Retail Consortium director-general Stephen Robertson was disappointed that the increase was ahead of inflation, but pleased it was "more moderate than previous rises". He said: "We are facing very difficult trading conditions while energy prices, rents, rates and service charges are all on the increase. We need an end to the annual uncertainty on minimum wage rates. There should be a real-terms freeze while the Low Pay Commission reviews future direction."

Association of Convenience Stores chief executive James Lowman hit out at the increase, which he said was far higher than the inflation rate of 2.2 per cent and public sector pay awards.

He said: “To expect businesses to deal with these above-inflation increases year on year is unacceptable. We support the principle of a minimum level below which wages should not fall, but the continual increases of this level are not sustainable or fair.”

Business secretary John Hutton said he was proud of the minimum wage. He maintained: “It makes a real difference to the lives of many of our lowest paid workers and protects them from exploitation. It also creates a level playing field for business and boosts the economy.”