BBPA calls for Gov help as inflation hits 30-year high

16-Feb-2022 - Last updated on 16-Feb-2022 at 10:28 GMT

Financial strain: BBPA calls for help after inflation hit 30-year high in Jan (Getty/DNY59)

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The British Beer and Pub Association (BBPA) has urged the Government to help the sector after inflation hit a 30-year high last month (January).

Consumer prices surged by 5.5% in the 12 months to January, up from 5.4% in December, the Office for National Statistics (ONS) revealed.

What’s more, inflation is now outpacing wage growth as food, energy and fuel costs rise. Inflation is expected to rise above 7% this year, the Bank of England said.

For BBPA chief executive Emma McClarkin, the new ONS figures highlighted further steep financial challenges the pub and brewing sector was facing following a devastating winter.

Rising inflation coincides with the sector experiencing record levels of debt and facing increased costs across the board from energy through to raw materials, as well as supply chain difficulties.

Support for the sector

McClarkin said: “We are urging the Government to heed the calls of our Long Live the Local campaign that seeks to support the sector for the long term by extending the current lower level of VAT, lowering beer duty, and introduce business rates reform that reduces the disproportionate burden paid by pubs to help them recover and fire on the UK economy.”

Overall, food and non-alcoholic drinks prices rose 4.3% versus January 2021. According to the ONS, household bills contributed to much of the annual inflation rise, as suppliers continued to face surging wholesale gas costs. Electricity was up 19% in the year to January, and gas up by 28%.

Financial pressure

The financial pressures on the sector are expected to worsen with the rise of VAT to 20% come April. More than 250 hospitality business leaders, including pioneering voices in the pub sector, have signed a letter urging the Chancellor to keep VAT at 12.5% beyond March 2022.

The letter is spearheaded by UKHospitality, whose chief executive Kate Nicholls said: “This industry has borne the full brunt of the economic restrictions due to Covid.

“Companies have no cash in the bank and are being squeezed from all directions. They must pass costs or go bust. The only question is by how much prices rise.”

According to Nicholls, if the Government retained the VAT rate it would give companies “room to breathe” after a challenging two years where hospitality was hit first, hardest and longest.