Drastic inflation drops on BWS

The latest Wilson Drinks Report has shown a sharp drop in the annual inflation on beer, wine and spirits.

Spirits saw the biggest fall, down from 8.4% in December 2011 to just 2% in January 2012.

Wine inflation meanwhile dropped from 6% in November 2011 to 3% last month and restaurants and cafés showed a fall for the fourth consecutive month.

Tim Wilson, managing director of the Wilson Drinks Report, commented: “We really welcome the overall drop in inflation from 4.2% in December to 3.6% in January. For once, the news is also good for alcohol drinkers, as the rate of inflation on all types of alcoholic drink fell for the month of January.

“As we predicted last month, the impact of the January 2011 VAT increase has now flowed through into the annual inflation figures, and we expect inflation to continue to fall during 2012.

“The RPI figure is also important as the alcohol duty escalator is based on RPI +2%. RPI fell 0.9% in January to 3.9%, and we expect the Office for Budget Responsibility to forecast RPI falling to around 3% in the second half of the year when they publish their latest estimates at the Budget next month.

“Many restaurant chains continue to provide some excellent value for money deals, which has helped keep prices down.”

Wilson finished with a look to the next budget report. He said: “All eyes will be on the Chancellor in March to see if the alcohol duty escalator will be applied again. Assuming it is, we estimate that the duty escalator will add a further 3p duty to a pint of beer in March 2012, which will likely mean a 9p increase at the pumps for beer drinkers.”