Is inflation coming for your after-work beer?

Higher prices mean people buy less beer.

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Main points:

• Inflation is cooling, but beer prices have risen more than many other goods in recent months.
• The cost of ingredients such as hops and barley have increased, as have other brewing costs.
• Cutting back on alcohol can save money.

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There are some signs that inflation may be cooling, or at least moving away from the boiling point we saw last year. However, the slowdown in price growth does not affect all of our costs equally. In fact, the prices of some products, 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 leading up to Christmas, more than last year. Some brands, such as Bud Light, Miller Lite, Yuengling Lager and Coors Light, saw their value increase by as much as 10%.

Data from the Bureau of Labor Statistics supports this. In November, the price of domestic beer increased by 1.8% compared to October, and the prices of ordinary food increased by only 0.2%. This was a much bigger price jump than other domestic spirits. Wine prices actually fell by 0.2% month-on-month, while spirits rose by just 0.9%.

Why does beer become more expensive?

There are several reasons why your favorite brew costs more than it did six months ago. To begin with, the industry is not immune to the supply chain issues and high energy prices that have affected other products. In addition, the cost of hops has increased due to drought in some parts of the world, and the Russia-Ukraine conflict has affected barley production.

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

The increase in prices has already turned into a reduction in consumption. Beer is often considered an anti-recession, especially at home. It’s one of those little luxuries that people can continue to buy even as they cut back on bigger expenses like vacations or new cars. Even so, the recent price hikes are 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 leading up to Christmas.

Everything in moderation

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

The trick to any money-saving program is to make it affordable. 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 may spend more money as a result. Instead, look at your budget and figure out what you currently spend on beer and what a reasonable beer budget might be.

You can cut costs by switching to a lower-priced brand or cutting back on how much 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 decided to give up alcohol completely, you could save $780 a year.

That figure might be more realistic instead of $10 a week. A $5 cut in spending can mean $260 more in your savings account a year. It won’t pay for a new car, but it can help cushion your finances a bit from economic uncertainty.