The boss of South Africa’s TFG, owner of British fashion retailers Hobbs and Whistles, said tax changes made by the UK government in last week’s budget would cost it an estimated 1 million to 2 million pounds ($2.59 million) annually.

Britain said last month it would raise employers’ National Insurance, or social security, contributions by 1.2 percentage points to 15% from April.

The new Labour government also announced a 6.7% rise in the minimum wage, increasing costs for all sectors.

But while the retailer’s costs will rise, TFG CEO Anthony Thunstrom said the budget “puts more spending power back into your average consumer’s hands and is ultimately a stimulus for consumer spending”.

Thunstrom told investors that the group’s UK team is modelling the changes.

“Undoubtedly there will be some inflation in terms of store staff salaries in particular. I doubt it’s a big number, probably somewhere between 1 and 2 million pounds,” Thunstrom said.

He does not foresee the retailer passing on these costs onto consumers. TFG London contributes about 13% to group sales.