Spirits prices set to soar as pound plummets

UK spirits consumers are facing the prospect of major price hikes if the government sticks to its policy of increasing duty in line with inflation, which is set to run higher due to the fall in sterling.

Spirit prices in the UK could soar if the government sticks to its policy of increasing duty in line with inflation

Analysts are forecasting inflation increases of 3% this year. With alcohol duty rates currently pegged to inflation, the spike means the end-price of all spirits could increase by 34p per litre, according to the Wine & Spirit Trade Association (WSTA).

UK consumers already fork out £3.3 billion in spirits duty each year. This increase in duty would add an extra £60 million to the bill.

At present, 74% of the average bottle of spirits in shops is taken up by tax, a proportion set to increase further if duty is increased as planned.

WSTA has labelled the duty increase “counterproductive”, citing a 2015 freeze on wine duty which actually bolstered government coffers by £139m (+3.6%) from April 2015 to March 2016.

The cut in spirits duty in the 2015 Budget increased government income by 4.1% or £125m over the same period.

“Drinkers of gin and other spirits are already paying a staggering amount in duty,” said WSTA chief executive, Miles Beale.

“Unless the government reviews this policy, the rise in inflation will slap a further £60m on spirits consumers.

“Worth almost £40bn, the UK wine and spirits industry makes a significant contribution to the UK economy and supports almost 600,000 jobs. These British jobs will be put at risk by damaging tax rises unless the Government re-examines its excise duty policy.”

WSTA has committed to bolstering the industry post-Brexit and last month struck up discussions with representatives in Australia and New Zealand regarding trade agreements.