What is the longer term scenario for beer and alcohol prices?
Gloomy. The Treasury says the latest duty increase will remain intact even when VAT returns to 17.5% in 13 months’ time. With a succession of annual duty rises of 2% over inflation pending, prices will remain on an upward spiral. By next spring’s Budget, alcohol prices will have soared 17% in 12 months. Q: Will soft drinks and packaged snack prices be affected by the VAT cut? A: Technically yes, although licensees and retailers may judge the cut to be so small reducing prices over the bar would not be worth the trouble. It could work out about 1p or even less on a packet of nuts. Q: How will food retailers cope with the VAT reduction? A: It is presently unclear how operators and licensees will react. Trade accountant David Jones predicts relatively few may actually reduce menu prices. Q: Why? A: Jones says the reduction works out roughly at 2p for every £1 and reckons many operators will conclude making changes is not worth the hassle. A £5 menu dish would be reduced by only 10p to £4.
