The average price of a pint of beer is set to surge past £5 for the first time in the UK, according to industry bosses. Research from the British Beer and Pub Association (BBPA) and Frontier Economics shows the average cost is expected to rise by 21p, from £4.80 to £5.01 in April.
Pub sector chiefs warn that prices must increase to help venues remain viable in the face of mounting cost pressures. The price hike comes amid a raft of cost increases linked to last October's budget, which will come into force next month.
Firms will face increases to the National Minimum Wage, which will rise by 77p an hour to £12.21. The rate at which employers pay National Insurance will increase from 13.8 per cent to 15 per cent.
At the same time, the threshold at which firms start paying will fall from £9,100 to £5,000 a year. Business rates discounts for the sector will be cut from 75 per cent to 40 per cent.
The publican industry is slamming Rachel Reeves's policies due to the impact of pint prices
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A new packaging reform scheme, described by the BBPA as "chaotic and unfair", will add further pressure. The net cost of these changes across the beer and pub sector is approximately £650million.
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."
She added it is "more urgent than ever" that the Government looks at ways to cap or reduce business costs. Tim Black, associate director at Frontier Economics, highlighted the challenges facing the sector.
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"The beer and pub sector has shown real resilience through a tough few years - navigating the pandemic, the energy crisis, and the cost-of-living squeeze. But more headwinds are coming," he said.
"The sector is at the sharp end of a wave of policy changes that will push up costs. The cumulative impact will be significant." He stressed the importance of policymakers recognising these pressures and ensuring the environment supports investment and growth.
Several brewers have already announced price increases in response to rising costs. Historic brewer Shepherd Neame, which makes ales including Spitfire and Bishops Finger, confirmed it will hike beer prices.
In February, Heineken increased the price of its draught beer by an average of 2.97 per cent for pubs, and its wholesale packaged products by 2.5 per cent.
Simon Dodd, the chief executive of Young's, said the chain plans to increase prices by between 2.5 per cent and three per cent. Wetherspoons has also recently raised prices of some drinks and meal deals by up to 30p.
Pubs and breweries across the UK have struggled in recent years as the high cost of living has dented customers' budgets.
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Pubs are closing down due to the cost of living
PARising energy bills and brewing costs have also had a significant impact.
Figures published by the Altus Group revealed more than 400 pubs across England and Wales were demolished or converted for other uses in the year to December.
As a result, the number of pubs across the two countries fell below 39,000 for the first time.
More than 34 pubs a month called last orders for the final time over the year.
