What’s happening to the price of a pint?

Last month chancellor Rachel Reeves said that the price of a pint of beer was set to drop as she reduced tax by the equivalent of a penny per drink.

But since then, the news for pub drinkers has been dire.

Chief executive officer of Fuller’s, Simon Emeny, has said that beer at his pubs and hotels will rise in price by 10 pence.

It comes after Ms Reeves hiked employers’ national insurance rates and lowered the threshold at which they are paid.

The move particularly hit retailers and hospitality firms which have large wage bills and employ younger workers.

Mr Emeny’s concerns echoed those of Tim Martin, the boss of rival chain Wetherspoon’s, who said last week that he and his competitors will have to increase prices.

He said: “Cost inflation, which had jumped to elevated levels in 2022, slowly abated in the following two years, but has now jumped substantially again following the Budget.

“All hospitality businesses, we believe, plan to increase prices, as a result.

“Wetherspoon will, as always, make every attempt to stay as competitive as possible.”

As well as NI increases, from April next year the minimum wage will rise to £12.21 for those 21 and over.

Trade body Hospitality UK said NI and the minimum wage hike will add £2,500 to the cost of employing a full-time staff member for its members each year.

According to the Office for National Statistics, a pint of draught lager has grown in price from an average of 92 pence in February 1987 to £4.79 in September of this year.

This rise is far faster than regular inflation. If the price of a pint had followed regular CPI inflation since 1987, it would cost £2.59 today.

One of the biggest jumps in price came after the coronavirus. In March 2020, a pint cost just £3.75.

open image in gallery

But since then, the price of fuel has leapt, making brewing and moving beer around far more expensive.

It has also made heating pubs pricier and pushed up the price of labour as workers demand more pay to ease their own cost burdens.

As well as VAT at 20 per cent, drinkers pay duty which works out at about 46 pence a pint, depending on strength.

Draught beer is charged at a slightly lower rate than wine and spirits, while cider is less still, with about half the duty of draught beer for flat cider.

Campaigners have suggested simplifying the taxation scheme for alcohol to stop cider from being more attractive to problem drinkers.

All this puts the 1 pence reduction from Ms Reeves into perspective.

Of the £4.79 pint, about 80 pence goes on VAT and 46 pence on alcohol duty, leaving about £3.50 to cover brewing and transport costs, plus the wages of the bartender who pulled the pint, and rent, heating and maintenance of the pub.

But some pubs are finding ways to help their margins.

A prominent London pub sparked anger by implementing a £2 surcharge on pints ordered after 10pm as part of a surge pricing policy, without listing the price change on the menu.

The O’Neills branch on Wardour Street, Soho has been raising its drink prices every evening, resulting in customers paying up to £9.40 for a pint.

This policy has drawn accusations from consumer experts who claim the chain is exploiting customers by not properly advertising the price hike.