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Alcohol is the main driver behind UK deflation

Alcohol is the main driver behind UK deflation


Source: The IWSR

November 20, 2015


Beer, wine and spirits all contributed to another fall in UK consumer inflation announced by the Office for National Statistics.


Overall annual inflation, as measured by the Consumer Prices Index (CPI), was down -0.1% for the month of October 2015, well below the Bank of England’s 2% target and also below the rise in average pay (+2.5% for Jul-Sep 2015).


The biggest fall in inflation within BWS came in wine, where prices fell -5% compared to October 2014. Spirits were just behind with a decline of -4.6%, while beer prices fell -3.1%.


Tim Wilson, managing director of WDR, commented: “The pressure exerted by the discounters is being felt across all categories within beers, wines and spirits. Wine in particular shows a big fall compared to last year, and this time there is no change in wine duty to impact the results as wine duty was unchanged in the March 2015 Budget. Perhaps British drinkers can look forward to some good celebrations at Christmas with average incomes rising significantly faster than consumer inflation.”


Wilson added: “Interestingly, the drop in BWS inflation comes on the same day that the latest Kantar data shows that Aldi and Lidl now account for 10% of total grocery sales. We expect further gains from the discounters when Aldi launches its online wine service next year.”