Next has revealed plans to raise its prices over the next five years in order to offset the effect of the national living wage.

The fashion retailer says it expects prices to rise by around 6% between 2016 and 2020, although Next said the bulk of the increase will be due to the knock-on effect the new living wage will have on other wages.

The national living wage will be compulsory for over 25s from April 2016. It will start at £7.20 before rising to £9.35 in 2020.

Next is the second major British employer this week to say it will raise prices to cope with the impact of the national living wage. Whitbread, which owns Costa Coffee and Premier Inn, also said it would raise prices.

Strong half

The announcement came as Next reported a 7% rise in its half-year pre-tax profits, which stood at £347 million. In the first six months of the year, Next's total sales - which include new stores - were up 2.7%.

Earlier this year, its share price fell after warning investors that its sales growth would not be as strong as recent results, predicting growth of 1.5 - 5.5%.