Shoppers heading to supermarkets and pubs may notice notice higher prices on some of their favourite drinks, after an increase in alcohol duty came into force.
From Sunday February 1 alcohol duty rose by 3.66 per cent in line with Retail Prices Index inflation following a decision confirmed in November’s Autumn Budget.
Although the tax was charged directly to producers industry leaders warned the increase would be passed on to consumers already facing ongoing cost of living pressures.
In practical terms the changes meant the duty on a typical bottle of 37.5% gin increased by 38p taking the total tax to £8.98 once VAT was included. A 40% bottle of Scotch whisky saw duty rise by 39p to £9.51 while a bottle of 14.5% red wine increased by 14p.
How much have beer, wine and spirits gone up?
While these individual rises appeared small, trade bodies said they came on top of a series of increases introduced since August 2023 when alcohol duty was overhauled and linked more closely to strength.
The Wine and Spirit Trade Association said the duty on a bottle of red wine had increased by £1.10 since that regime was introduced making it harder for businesses to absorb further costs.
For consumers this translated into higher shelf prices in supermarkets and increased prices in pubs and bars.
Beer drinkers were also affected with duty rising on drinks sold both in pubs and shops. Pubs were impacted for the first time since 2017 raising concerns that further price rises were likely.
Is there a way to cut these costs?
Some brewers responded by reducing alcohol strength to lower duty costs with several popular lagers dropping below the 3.5 per cent ABV threshold that attracts a lower rate of tax.
While this move helped limit price increases it also meant some shoppers paid similar prices for weaker drinks.
A Treasury spokesman said: “For too long the economy hasn’t worked for working people, and cost-of-living pressures still bear down.
“That’s why we are determined to help bring costs down for everyone.
“It’s why we’re taking £150 off energy bills, increasing the National Living Wage, ending the two-child limit, rolling out free breakfast clubs for all primary school children, and freezing fuel duty, rail fares and prescription fees.
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“We need to rebuild the public services we all rely on.
“We’ve put record funding into our schools and NHS to give every child the best start in life and bring down waiting lists.
“Alcohol duty plays an important role in ensuring public finances remain fair and strong and funds the public services people rely on every day.”
