Double-digit alcohol duty rise fuels inflation in UK

UK inflation rose unexpectedly in December 2023 for the first time in 10 months, fuelled by the 10.1% duty hike on alcohol last August.

The UK’s annual inflation, as measured by the consumer price index, rose from 3.9% in November to 4.0% in December.

The rise has been largely attributed to the increased costs of alcohol and tobacco.

Miles Beale, chief executive of the WSTA, said: “This time last year alcohol inflation was 3.5%. We told the government its plans for the duty system would push up inflation.

“Now, alcohol inflation is almost three times the rate of a year ago – inflation for spirits is at 8.9%, wine 7.8% and fortified wine 18.7%.

“If the government is serious about taking measures to cut inflation, the simple answer is to cut alcohol excise duty at the next budget and stop the duty system reforms where they are now.

“The latest sales stats show better than expected grocery sales – except for alcohol, which have fallen. This is further proof that government must do more to support the wine and spirit trade in order to boost economic growth.

“Politicians only need to look back over the spreadsheets to discover that cutting alcohol duty brings more revenue to the Treasury and keep prices down for hard-pressed consumers. Cutting duty is a ‘win, win’ for all.”

UK chancellor Jeremy Hunt announced a duty rise for spirits during his spring budget 2023 in line with inflation, which resulted in a 10.1% increase on 1 August 2023 – one of the biggest tax increases for decades.

Alcohol duty was frozen until August this year during the chancellor’s autumn budget.

Earlier this week, financial experts at tax and accounting firm Rift Tax Refunds found £12.4 billion (US$15.7bn) was paid to HMRC (His Majesty’s Revenue & Customs) in alcohol duty during the 2022/23 financial year – a 5.1% decline compared with the previous 12 months.