Spiralling Cost of Spirits Drives Surprise Inflation Rise


Economists Predict Consumer Prices Index to Reach 4.2% in January

The latest inflation figures have shown an unexpected increase, and economists believe that the rising cost of spirits may be a contributing factor. The Consumer Prices Index, which stood at 4% in December, is expected to rise to 4.2% in January.

Gin-Flation: Spiralling Prices of Favourite Tipples

One significant driver of this increase is the soaring prices of popular alcoholic beverages, with the phenomenon known as "gin-flation" nearly doubling in the six months leading up to December. The price of spirits increased by 5% in the year to July, but by December, booze inflation had skyrocketed to 8.9% for the year.

Duty Increase and Taxation Pressures

According to drinks makers, the price rises can be attributed to the 10.1% duty increase imposed by the government in August. The UK spirits industry, including gin and Scotch whisky, bears the highest tax burden among alcohol categories, with 80% of the cost of a bottle going to the Treasury.

Call for a Cut in Duty

The spirits industry is advocating for a reduction in duty to alleviate the burden on consumers and the struggling hospitality sector. Stephen Russellf, co-founder of Copper Rivet distillery and spokesperson for the UK Spirits Alliance, emphasized that a duty cut in the upcoming March Budget would ease the pressure on household budgets and support a hospitality sector grappling with closures and low footfall. Distillers would also benefit from this move after last year's record tax hike.

Comparative Taxation: UK vs. France and Spain

For an average-priced one-litre bottle of spirits in the UK, more than £12 is taken in duty. In contrast, the figure is £6.45 in France and just £3.32 in Spain. These stark differences highlight the burden placed on UK consumers and the potential room for a reduction in duty.

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