Whitbread, the owner of Premier Inn hotels and Costa Coffee, said it expected to cut spending and increase some prices to counter the "substantial" cost of the higher national living wage in the UK.

It made the announcement today after it posted slowing second quarter sales. 

British finance minister George Osborne announced a bumper pay increase in July, with the current £6.50 minimum wage set to rise to a £7.20 for those aged over 25 from next April. 

Renamed the "living wage", the rate will grow steadily over the following four years to around £9.35 an hour. 

Whitbread said it was developing plans to mitigate the "substantial cost increase" and would announce details of its plans at its half-year results on October 20. 

The company said group like-for-like sales grew by 3.3% in the 11 weeks to August 13, slowing from growth of 4.3% in its first quarter, though Whitbread said it remained on track to meet full-year expectations. 

Underlying sales at Premier Inn rose 4.3% in the period, compared with 6.3% first quarter growth, with new openings helping total sales rise 11.6%. 

Total Costa sales grew 16.2%, with sales at stores open over a year up 4% against strong comparatives and softer than expected trade in August.