Chancellor Philip Hammond said the increase for over-25s from April was worth more than £500 to a full-time worker.
The TUC countered that workers aged 24 and under would continue to be paid hundreds of pounds less.
Katherine Chapman, director of the Living Wage Foundation, which sets a higher voluntary rate for a living wage, said: “We welcome any pay rise for low-paid workers, especially now in these uncertain times with speculations about food and other prices set to rise.
“The reality, however, is that a fifth of UK workers aren’t paid enough to live on. There’s still a gap between the Government minimum and our real Living Wage of £8.45 in the UK and £9.75 in London, which is based on what families need to earn to meet everyday costs.
“We encourage as many businesses who can to join our movement of 3,000 UK employers who are going further to pay a real Living Wage because a hard day’s work deserves a fair day’s pay.”
Louise Boland, managing director at Opus Energy, said the higher rate from next year would put added financial pressures on small businesses, adding: “Ultimately raising the living wage makes good business sense.
“The extra 30p an hour has the potential to reduce staff turnover, close the gender pay gap with more than three million women set to benefit, boost employee engagement, along with the benefits to the economy via an incremental boost to disposable income. This is clearly a step in the right direction for society and business.”