UK's Next says would need to raise prices to cover minimum wage hike

(Recasts with minimum wage detail)

LONDON, Sept 10 (Reuters) - Next (Other OTC: NXGPF - news) , Britain's second-largest clothing retailer by sales value, said it would need to raise its prices to pay for an increase in the minimum wage, becoming the latest company to warn on the impact of the British government's policy.

Finance Minister George Osborne in July announced a pay increase for the country's lowest-paid workers to counter criticism the benefits of economic recovery have not been shared out fairly.

The hourly minimum wage will rise from next April to 7.20 pounds ($11.1) for those aged over 25, from 6.50 pounds now, and to about 9.35 pounds an hour by 2020.

Next said that the total cost of the higher minimum wage, which the government has renamed the living wage, would be 27 million pounds ($41.6 million) a year, and that it would need to increase its prices by 1 percent to compensate for that cost.

Earlier this week Whitbread (LSE: WTB.L - news) , which owns the Costa Coffee (NYBOT: KC-ZK15-c.NYB - news) chain and is one of Britain's biggest employers, said it faced a big rise in costs due to the wage reform and would probably take on fewer extra staff.

Cleaning services firm Interserve (LSE: IRV.L - news) said its 2016 margins could take a hit of up to 15 million pounds, while Mears , a care worker company, said the cost of meeting the higher wage bill would be up to 5 million pounds.

Britain's independent Office for Budget Responsibility has estimated the new minimum wage will result in 60,000 fewer jobs and projected the cost to business would amount to 1 percent of corporate profits.

Publishing its half-year results earlier on Thursday, Next (EUREX: NXTI.EX - news) said its profit rose 7.1 percent to 347.1 million pounds in the six months to July after it sold more products than expected at full price.

($1 = 0.6499 pounds)

(Reporting by Kate Holton and Sarah Young; Editing by Pravin Char)