UK alcohol prices drop by 3% in 2015

The Wine and Spirit Trade Association (WSTA) has responded to “overinflated” reports blaming alcohol for the UK’s rising cost of living, stressing that alcohol price inflation has actually dropped by 3% in the last year.

The Office of National Statistics noted a rise in prices for alcoholic drinks between December 2015 and January 2016, with some news outlets subsequently blaming alcohol for the UK’s high cost of living.

In fact, alcohol prices over the past year have actually dropped, with the WSTA crediting a 2% cut for spirits and a freeze for wine duty in the chancellor’s March Budget. Wine enjoyed the biggest drop of 4.7%, followed by spirits at 2.3% and beer at 0.6%. The WSTA said that a spike following Christmas and New Year, when Christmas deals and offers generally come to an end, was “not unusual”.

Furthermore, since the Government froze wine and cut spirits duty in 2015, price increases on alcohol have slowed significantly, proving the benefits of a cut in duty to consumers.

In the last nine months Exchequer revenue from wine, between April and December, jumped 4% growing by £114m compared to an increase of just £59m in 2014.
Spirits revenue for the same period also went up 4%, or £96m, compared to a decline in revenue of £11m in 2014.

The 2008 Alcohol Duty Escalator, which automatically increased tax on alcohol every year and was scrapped in 2014, dramatically increased costs on drinkers; 55% of a bottle of wine and 74% of a bottle of spirits in shops is taken up in tax. However the UK still has the second highest wine duty in the EU and fourth highest for spirits.

“We welcome cuts which have proved to be an all-round winner”, said Miles Beale, chief executive of the Wine and Spirit Trade Association. “Evidence shows that duty cuts are not only popular with consumers, who are benefiting from lower inflation, but have also led to greater revenue to the Exchequer, more jobs and greater investment by the industry.”
The WSTA is now calling for a further 2% cut to spirits duty, and a first 2% cut to wine duty in the Budget next month.

“Our ask of the Chancellor in the 2016 Budget is therefore very simple”, adds Beale. “To build on his admirable decisions at the last two March budgets, and to move away from some of the highest excise duty rates in the EU. We are calling on the Government to cut excise duty on wine and spirit by a modest 2%.”