(Reuters) - British pub group J D Wetherspoon said on Wednesday its like-for-like sales rose 5% in the 25 weeks to Jan. 19, helped by strong demand for its food and drinks during the holiday season.

UK pub groups, which enjoyed stellar festive-season sales, are now facing tempered growth prospects as higher taxes and labour costs fuel concerns about price hikes that could hurt consumer spending.

Around one in six British companies cut hiring late last year, the highest share since early 2021, according to a survey that showed firms felt pressure to raise prices due to tax increases that will come into force in April.

The British pub chain, which employs more than 42,000 people, expects its labour-related costs to increase by around 60 million pounds ($73.91 million) per year.

Shares of the company rose as much as 2.5% in early trading before retreating because of the anticipated cost impacts.

The pub group, often referred to as "Spoons", has sold several underperforming venues and been expanding to high-traffic locations. Jefferies' analysts said it was well placed to cope with rising costs.

"Wetherspoon's low-price consumer proposition should benefit in the event of trading down, with market share gains as smaller scale operators struggle to absorb wage inflation," they said in a note.

Chairman Tim Martin said the group expected a "reasonable outcome" for the year, although the cost increase had made forecasting more challenging. He said previously that the group did not have any immediate plans to raise prices, although he expected the broader hospitality industry to implement hikes.

($1 = 0.8118 pounds)

(Reporting by Raechel Thankam Job; Editing by Subhranshu Sahu, Tomasz Janowski and Kate Mayberry)