Inflation hike shows ‘unrelenting cost pressures’ on sector

17-Jan-2024 - Last updated on 17-Jan-2024 at 09:58 GMT

Unrelenting cost pressures: headline rate of inflation increased to 4% in year to December 2023 (Credit: Getty/J Studios)

The increase to inflation in December “underscores the unrelenting cost pressures” faced by hospitality businesses.

Figures released by the Office for National Statistics (ONS) today (Wednesday 17 January) revealed the headline rate of inflation rose to 4% in the 12-months to December 2023, up from 3.9% in November.

The numbers also marked the first time the Consumer Prices Index (CPI) had increased since February 2023.

Tax burden

On a monthly basis, CPI rose by 0.4% in December last year, the same as in December 2022.

British Beer & Pub Association (BBPA) chief executive Emma McClarkin said: “The increase in December’s inflation rate underscores the unrelenting cost pressures faced by the beer and pub sector and the continued challenge to manage these costs while keeping businesses operating.

“It makes it more important that the Chancellor addresses the tax burden our industry faces and continues to invest in breweries and pubs at the Spring Budget with a cut to beer duty, a cap on the business rates multiplier and a reduction to the VAT rate applied for hospitality.”

Alcohol and tobacco prices were cited as having largely driven the rise having increased by 12.8% during the 12-month period, compared with a 10.2% hike in November 2023.

However, food and non-alcoholic beverages rose by 0.5% compared with a rise of 1.6% a year ago, with an annual rate of 8% in December 2023, the lowest since April 2022.

Back into focus

In a social media post shard to X, formerly known as Twitter, UKHospitality chief executive Kate Nichols said the price hikes for alcohol and tobacco should serve as a “reminder” to the Government that increases to wages and business rates “feed into consumer prices”.

The post said: “A slight tick up from 3.9 to 4% - but still below where it had been forecast to be at 4.5%. Largely tobacco duties so reminder to Government that tax and regulatory cost increases like NLW and business rates feed into consumer prices - more needed to avoid an April spike.”

The Campaign for Real Ale (CAMRA) chairman Nik Antona added the increase had brought the "issue of energy costs back into focus."

He said: “Brewers, licensees, and pub-goers alike had been hoping for news this morning that inflation had continued to fall. Seeing the ONS report the first rise in consumer prices for almost a year, and with colder weather bringing the issue of energy costs back into focus, it’s instead clear we could be facing a second winter in crisis.

“It’s key that Government act at the Spring Budget by lowering the draught duty rate and introducing a VAT cut for hospitality – measures which will put money back in the pockets of consumers and the trade alike.”