Asda has said it will invest £150 million into giving more than 120,000 staff an 8.4% pay rise.
The UK’s third largest supermarket chain said it will increase basic pay for retail workers to £12.04 an hour later this year, with those at stores inside the M25 receiving £13.21.
It is the latest supermarket group to hike pay rates, ahead of an increase in the national minimum wage in April.
The national minimum wage will increase from its current rate of £10.42 to £11.44 on April 1.
Asda currently pays an hourly rate of £11.11 to staff, with that increased to £12.28 within the M25.
It said it will give staff an interim increase to the new national minimum wage in April, with those inside the M25 receiving £12.61, before it launches the larger pay deal in July.
Usdaw, the trade union that negotiates with Asda on retail pay in Northern Ireland and in Asda Express, is recommending members accept the rates in a ballot that closes on March 15.
Mohsin Issa, Asda co-owner, said: “This record investment will see Asda become the highest paying grocery retailer in the UK, recognising the hard work of our store colleagues in serving customers every day.
“We want to be a company that people are proud to work for, which is why we are proposing increasing pay for retail and Express colleagues by more than 8% this year.”
The announcement comes as the supermarket group opens its 1,000th UK store in Stevenage, amid the rapid expansion of its convenience business following its takeover by the Issa brothers and TDR Capital in 2021.
On Friday, Mr Issa also told the BBC that he plans to hand over the running of the supermarket group to a chief executive after completing a “reset”.