Alcohol Price Hikes Account for £3 in Every £100 of UK Inflation, Study Finds

Alcohol prices have played a notable role in driving inflation in the United Kingdom during 2025, according to new research from the Scotch Whisky Association (SWA). The trade group analyzed data from the Office for National Statistics and found that alcoholic beverages alone were responsible for £3 out of every £100 of inflation increases in the year leading up to August 2025.

The SWA attributes this impact to a 14% rise in alcohol duty over the past two years. As a result, about three-quarters of the price of an average bottle of Scotch whisky now goes toward taxes. The association and other industry groups have been urging Chancellor Rachel Reeves to take immediate action to halt what they describe as damaging increases in alcohol duty. They argue that such measures would support not only the spirits industry but also its broader supply chain and related sectors.

Further analysis by the SWA suggests that for every 1% increase in alcohol duty announced in the upcoming Budget, government borrowing costs could rise by £90 million next year. The association is calling for targeted support for spirits like Scotch whisky in the Autumn Budget, warning that continued tax hikes could undermine both business confidence and public finances.

The SWA points to government data showing that two years of duty increases have resulted in Treasury revenue falling £600 million short of forecasts made by the Office for Budget Responsibility. Consumer confidence has also been affected, with recent figures from HM Treasury revealing that revenue from spirits duty dropped 17% in September compared to the same month last year.

Mark Kent, chief executive of the SWA, said that increasing alcohol duty raises prices for consumers, reduces business confidence, and negatively affects public finances. He noted that Chancellor Reeves has expressed dissatisfaction with current inflation levels and argued that high spirits taxes are a significant contributing factor.

Kent emphasized that there is broad support across various sectors for action on spirits duty. He said a freeze on excise duty in the Autumn Budget would help businesses regain confidence in their domestic market, ease pressure on consumers ahead of the holiday season, and reduce Treasury borrowing costs in future years.

The SWA’s findings come as other industry groups, such as the Wine and Spirit Trade Association (WSTA), have also called on the government to abandon planned duty hikes. The WSTA warns that further price increases will only add to inflationary pressures. A recent poll conducted by the WSTA found that 72% of adults who drink alcohol believe prices have increased either “a lot” or “somewhat” in shops over the past year. In restaurants and pubs, 74% reported similar price rises.

The survey also found that more than a third of those who noticed higher prices are now less likely to buy alcohol in shops, while 55% said they are less likely to purchase alcohol in bars and restaurants. Miles Beale, chief executive of the WSTA, argued that instead of increasing government revenue, higher duties are reducing tax receipts and fueling inflation. He called for a freeze on excise duty on wines and spirits at the November Budget as a way to break what he described as a cycle of tax increases penalizing consumers and depleting Treasury funds.

Industry leaders continue to press for urgent government intervention as they warn that ongoing tax hikes threaten both consumer spending and economic stability within the drinks sector. The debate over alcohol pricing and its impact on inflation is expected to remain a key issue as policymakers prepare for upcoming budget decisions.