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A flurry of cost increases heaped on the pub industry next month will push the average price of a pint of beer above £5 for the first time, bosses have warned.
The British Beer & Pub Association (BBPA) said a combination of higher taxes and increases in the minimum wage will mean the average cost of a pint of beer is to surge by 4.4pc, rising faster than the current rate of inflation.
This means drinkers can expect to pay an average of £5.01 per pint in Britain compared with the current price of £4.80, it said, citing a survey by Frontier Economics.
In London, the average price of a pint hit £6.75 last year, according to a survey by the personal finance website Finder – meaning a similar 4.4pc increase would see the price of some pints approach or even breach the £7 mark.
The soaring price of beer in Britain has been blamed on a string of cost increases heaped on brewers, pubs and drinks companies.
Bosses have warned about the inflationary impact of Rachel Reeves’s decision to increase employers’ National Insurance contributions (NICs) and lower the threshold for earnings at which they are paid from £9,100 to £5,000. At the same time, businesses face a 6.7pc rise in the minimum wage.
Emma McClarkin, chief executive of the BBPA, said: “The cumulative impact of these taxes and regulations is now plain to see and it is highly unfortunate that the only way many pubs can remain viable is to pass on the array of upcoming costs to consumers.
“No one wants to see the cost of an average pint increase by a further 21p and break the £5 average pint barrier that will be required for pubs to maintain their punishingly slim profit margins.”
Because hospitality companies often rely on lower-paid and part-time staff, chiefs have accused the Chancellor of disproportionately hammering pubs and restaurants compared to other industries by moving the threshold for NICs.
Last week Sir Tim Martin, the boss of JD Wetherspoon, revealed his company will have to pay an additional £60m in labour costs per year as a result of the changes, arguing the tax rises will make it even harder for pubs to compete against supermarkets for sales.
Adding to smaller hospitality companies’ worries is the prospect of having to pay more in business rates. Previously, small hospitality and retail businesses received a 70pc discount on rates up to a maximum cap of £110,000 – a measure that was brought in to help them weather the pandemic. From April that rate will drop to 40pc.
In total, the BBPA said the impact of new costs from Ms Reeves’s October budget alone would amount to a hit of approximately £650m for the beer and pub industry.