You're here: Home / Alcohol knowledge centre / Price / Factsheets / How has the cost of alcohol changed over time?

How has the cost of alcohol changed over time?

As with most products, the price of alcohol is subject to inflation over time. The UK’s Office for National Statistics tracks alcohol prices as part of its Retail Prices Index. Figure 6 shows how this has evolved over time, in particular demonstrating that prices in the off-trade (supermarkets and off-licences) have risen much more slowly than those in the on-trade (pubs, clubs, bars, restaurants and hotels), with the gap widening significantly since the early 1990s.[1] Indeed, beer prices in the off-trade today are around the same level as they were in 2001. It is notable that the only period of significant price rises in the off-trade in recent years is between 2008 and 2013: this is likely to be linked to the duty escalator (see below).

 


 

It is often argued that the price of alcohol is less relevant than its affordability.[2] In other words, since people’s ability to buy alcohol depends on their incomes and the price of other goods, as well as the price of alcohol, these should be considered together. For example, an analysis of data from New Zealand found that consumption of beer and wine was more closely correlated with affordability than price.[3]

Such an approach has strengths and weaknesses: its comprehensiveness is a good thing, but may obscure underlying trends in different indicators. Moreover, some argue that affordability is a less useful measure than price for policymakers as it does not relate directly to a policy instrument.[4]

NHS Digital (formerly the NHS Health and Social Care Information Centre) calculates a measure of the affordability of alcohol in the UK since 1980. This is calculated by dividing real household disposable income by the relative price of alcohol compared to other goods.[5]

The alcohol affordability index shows that alcohol was 60% more affordable in 2015 than 1980, and that affordability rose by 36% between 2005 and 2015. It also shows that having declined between 2007 and 2013 in the wake of the recession and rising alcohol taxes, affordability has begun to rise again.

Previous: How much do people pay for alcohol?  |  Next: How does the price of alcohol affect consumption?


[1] ONS (2016), ‘Consumer Price Inflation time series dataset’ <https://www.ons.gov.uk/economy/inflationandpriceindices/datasets/consumerpriceindices>

[2] University of Stirling, Alcohol Health Alliance, British Liver Trust (March 2013), ‘Health First: an evidence-based alcohol strategy for the UK’, Stirling: University of Stirling, p. 18

[3] Wall M and Casswell S (2013)., ‘Affordability of alcohol as a key driver of alcohol demand in New Zealand: a co-integration analysis, Addiction 108:1, pp. 72–9

[4] Rabinovich L et al (2009)., ‘The affordability of alcoholic beverages in the European Union’, RAND Corporation, p. 24

[5] HSCIC (Health & Social Care Information Centre, now NHS Digital) (June 2016), ‘Statistics on Alcohol, England, 2016’, Appendices, p. 11