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£6 a pint?! Beer prices set to rocket as inflation bites

£6 a pint?! Beer prices set to rocket as inflation bites
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The Autumn Budget isn’t announced until 27 October, but beer prices are already rising before any potential tax hikes are announced. So will paying £6 for a pint soon become the norm? Let’s take a look.

How much are beer prices expected to rise?

Beer prices are set to rise by up to 30p a pint in the Autumn Budget. 

Such an increase would result in the cost of a pint hitting nearly £6 in London. The average pint in the capital already costs £5.33 according to research carried out in April.

For the rest of the UK, the average price of a pint is currently £4.57, meaning a national average of £5 is now on the cards. 

Worryingly for pub-goers, more than eight in 10 pubs have said they will hike (or have already hiked) their beer prices. 

Why are beer prices rising?

Rising costs faced by publicans have been given as the main reason for having to increase the cost of booze. 

According to the industry, rising energy prices, global supply shortages and demands for higher wages following a lack of workers have all played a part in burdening customers with higher beer prices.

The C&C Group, a large manufacturer and distributor of alcoholic beverages, echoed these reasons. A spokesperson for the group recently told The Times newspaper: “As our industry recovers from the pandemic, the pressure on UK and global supply chains has added increased cost and complexity.”

Another reason for rising beer prices can be credited to rising inflation in the rest of the economy. That’s because inflation results in a general increase in the cost of goods or services. This means rising beer prices may just indicate that the pounds in our pockets are now worth less than they were a year ago.

See our recent article on inflation to learn more about why prices are increasing across the economy.

Why is there a lack of hospitality staff?

Staff shortages and higher wage demands have been well documented across the UK economy in recent months. For the hospitality sector, it has been reported that there are currently 134,000 vacancies waiting to be filled.

Despite this, the UK unemployment rate is currently at 4.6%, which is the highest level seen since 2016.

To find out more about why this is, see our recent article on how unemployment can be so high with so many available jobs.

Will beer duty rise?

The pub industry has appealed to the chancellor to suspend any potential hikes in beer duty in the Autumn Budget. If he does not, then it’s possible that the price of a pint will exceed £6 a pint in London. Elsewhere, the cost of a pint is likely to rise to more than £5.

Currently, the amount of beer duty you pay on each pint depends on the amount of alcohol it contains:

  • If your beer contains between 1.2% and 2.8% alcohol, then you pay 8.42p per pint. 
  • If it has between 2.8% and 7.5%, you pay 19.08p per pint.
  • And if there’s more than 7.5%, you pay 24.77p per pint.

Aside from beer duty, 20% VAT is also payable on beer, regardless of its strength. 

It’s fair to say that numerous tax rises are on the horizon in next week’s Autumn Budget in order to claw back cash for the public purse following the government’s response to Covid-19. As a result, it’s probable that pub-goers will not escape the chancellor’s red box.

To learn more about other possible tax rises in the upcoming Autumn Budget, see our recent articles outlining possible changes to pensions, and the introduction of an online sales tax.

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