According to today’s headlines, the primary culprits responsible for the 12.9% collective price increase, which drove this month’s overall inflation, were tobacco and alcohol, as reported by the Office for National Statistics (ONS). Using the consumer prices index, ONS data revealed that the combined category of tobacco and alcohol surpassed the 8% inflation observed in food and beverages or the 8.5% in communications, which was the second-highest category.
However, Grant Fitzner, the ONS’s chief economist, pointed out that this headline figure was primarily a result of recent higher taxes on tobacco products, which were also applied to alcoholic beverages. This suggests that alcohol may be unfairly grouped with these tax-induced increases.
Based on ONS figures, The Guardian reported that over the past 12 months, tobacco prices have surged by 16%, surpassing the increases seen in wine (7.8%), spirits (8.9%), and beer (12.8%). However, certain goods have experienced even more substantial price hikes, with olive oil now standing 45% higher than a year ago, sugar up by 21.3%, and increases in coffee (11.9%) and tea (11.3%).
In response to today’s data, Miles Beale, Chief Executive of the Wine and Spirit Trade Association (WSTA), highlighted that alcohol inflation stood at 3.5% at the same time last year. He remarked, “We warned the Government that its plans for the duty system would drive up inflation. Now, alcohol inflation is nearly three times the rate compared to a year ago, with spirits at 8.9%, wine at 7.8%, and fortified wine at 18.7%.” He concluded by suggesting that if the Government is serious about addressing inflation, it should consider reducing alcohol excise duty in the upcoming Budget.
Despite industry claims of unfair treatment of wine and spirits under the new duty system introduced by the government in August, the government initiated the most significant duty change in 50 years. This resulted in a “worrying decline” in sales, according to the WSTA.
Analysis of December HMRC data by tax rebate specialists RIFT revealed that during 2022-23, £12.4 billion was paid in alcohol duty to HMRC, marking the second-highest total in the last two decades. However, it also noted a 5.1% reduction compared to the record figure of 2021-2022, representing the most substantial annual decline observed in a single year over the past two decades, supporting the argument that people are consuming less alcohol.
