Finance

Is inflation coming for your after-work beer?

A group of laughing friends drinking beer at a table in a restaurant terrace.

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Higher prices mean people buy less beer.


Key points

  • Inflation is cooling, but beer prices have jumped more than many other items in recent months.
  • The costs of ingredients such as hops and barley have risen, as have other breweries.
  • Reducing your alcohol consumption can save you money.

There are some signs that inflation may be cooling, or at least coming off the boiling point we saw last year. However, the slowdown in price growth does not affect all of our consumption equally. In fact, the prices of some items — such as beer and even eggs — continue to rise even as others fall.

An analysis of Nielsen data by Bump Williams Consulting found average beer prices rose more than 7% in the 12 weeks before Christmas, more than the previous year. The price of some brands, such as Bud Light, Miller Lite, Yuengling Lager and Coors Light, increased by as much as 10%.

This is confirmed by data from the Bureau of Labor Statistics. Beer at home was 1.8 percent more expensive in November than in October, while prices of common food items rose by only 0.2 percent. This was a much bigger price jump than other alcoholic beverages at home. Wine prices actually fell by 0.2% on the month, while spirits rose by just 0.9%.

Why does beer go up in price?

There are several reasons why your favorite beverage costs more than it did six months ago. For starters, the industry is not immune to supply chain issues and higher energy prices that have affected other products. On top of that, the price of hops has increased due to droughts in some parts of the world, and the conflict between Russia and Ukraine has affected barley production.

Another issue for smaller breweries is the cost of cans. In November, the largest canner supplier in the US announced significant changes to minimum order requirements and warehouse provisions. September also saw a lack of CO2, another key ingredient for some breweries.

The rise in prices has already translated into a reduction in consumption. Beer is often considered recession-proof, especially at home. It’s one of those little luxuries that people can continue to buy even when they cut back on bigger expenses like vacations or new cars. Even so, the recent price hikes proved too much for some consumers who bought less in December. Bump Williams Consulting said sales of its premium beer Michelob Ultra rose 0.8% for the full year, but fell 2.3% in the month before Christmas.

Everything in moderation

I’m British and drinking is so ingrained in our national psyche that it almost pains me to write this. But beer is not a necessary item. In fact, even if beer prices don’t go up, cutting back on after-work drinks — whether at home or at the bar — can be a good way to save money.

The trick to any money-saving plan is to make it achievable. If one of the things that brings you joy is going out for a few drinks with friends or opening a craft beer at home, don’t cut it out completely. You’ll be miserable and could spend more money because of it. Instead, look at your budget and assess how much you’re currently spending on beer and what a reasonable beer budget might be.

You may be able to cut costs by switching to a cheaper brand or reducing the amount you drink. You may already be trying out Dry January, which some say is good for both your bank balance and your health. Let’s say you typically spend $15 a week on alcohol. If you decide to give up alcohol altogether, you could save $780 a year.

It might be more realistic to try to lower that figure to $10 a week. A $5 reduction in spending can mean $260 a year more in your savings account. It won’t pay for a new car, but it might help cushion your finances a bit against economic uncertainty.

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