The Government announced today that the adult rate for national minimum wage will increase by 1.9% from £6.19 to £6.31 per hour from October.

The Association of Convenience Stores said the increase will see 80% of retailers reducing staff hours and 67% delaying expansion or investment.

James Lowman, from the ACS, said: “This increase will result in reduced employment and act as a barrier to growth for thousands of local retailers. In the current economic climate, the right decision for businesses would have been to freeze minimum wage.

“Our research has shown that retailers have little choice but to reduce staff hours and delay further business investment when the minimum wage is increased.”

The ACS estimates that the actual cost to a retailer for a full time employee will be £7.23 per hour when holiday entitlement and national insurance contributions are taken into account.

The Forum of Private Business said the increase was an ‘unwelcome’ additional cost in the current business climate.

Head of Policy at the Forum, Alex Jackman, said: “We appreciate that for the second year running the Government has implemented an increase in the National Minimum Wage that is below inflation, and for this restraint employers will no doubt be thankful.

“Many of our members pay above the National Minimum Wage but we are in difficult economic times and the government has recognised that any increase in NMW has a wage inflation rate higher up the scale.

To put the wage rise in context, at the Budget the Government announced an Employment Allowance to save all employers £2000 on their staffing costs, to be implemented from April 2014.

As the increase in National Minimum Wage comes into effect this October, today’s increase will mean a business employing 9 or more full time members of staff on the minimum wage will see over half of that wiped out before it even comes in.

Jackman added: “Given this impact, the country categorically cannot afford the misleadingly titled ‘living wage’ in its current predicament.”

Katja Hall, chief policy director from the Confederation of British Industry, said: “Pay restraint has been crucial in creating jobs in this tough economic climate.

“The LPC [Low Pay Comission] has struck a careful balance in setting the rates given sluggish growth, particularly in recommending a cautious approach to youth pay.

“The LPC will need to monitor the impact of raising the adult rate very carefully. Given average earnings this year are already lower than expected, we must make sure the minimum wage doesn’t limit jobs in key sectors, by outstripping pay across the rest of the workforce.”