The UK's second largest grocer and one of the country's biggest employers said 127,000 hourly paid workers will get a 25 pence per hour increase from 16 October, costing it £20 million ($23.4 million).
Sainsbury's said the rise, the first ever outside of the annual pay review, would help its staff get through the cost of living crisis.
Its workers' hourly pay will go from £10.00 to £10.25 and from £11.05 to £11.30 in London.
The rise takes the pay increase for frontline, hourly paid workers to 7.9% this year. However, inflation hit 10.1% in July.
With Britain's jobless rate at its lowest since 1974 the Bank of England is watching pay settlements closely as it mulls further rises in interest rates.
Sainsbury's said it was also giving staff access to basic food items during shifts from the first week in October until the end of December and increased discounts at Sainsbury’s and Argos. That will cost it an additional £5 million.
Other retailers, including market leader Tesco and John Lewis, are also upgrading perks to workers, enticing them with free food and essentials.
Sainsbury's warned in April of a drop in profit this financial year as soaring inflation raises its costs and hits shoppers' spending.
Its shares were down 2% at 0949 GMT, extending 2022 losses to 24%.