Alcohol and tobacco prices rise again

Alcohol and tobacco prices rise again
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Peninsula Team, Peninsula Team

(Last updated )

A 0.1% increase from November to 4% in December is proving inflation refuses to let up with alcohol and tobacco prices influencing the rise most

This is the first increase in inflation since February 2023 when it rose from 10.1% in January to 10.4% in February, however December 2022 saw a high of 10.5%. On a positive note there has been a 6.5% reduction on the year to December 2023.

Alcohol and tobacco prices rose by 12.9% on the year after an increase in taxes on tobacco following hikes announced in the Autumn Statement, reflecting a monthly increase of 1.3%.

Prices were also up across the recreation and culture sector followed by clothing and footwear.

Danni Hewson, head of financial analysis at AJ Bell said: ‘It’s a tiny spike but psychologically it’s a mountain. Households had begun to hope the colossal hikes that had taken a salami slicer to their budgets over the past year might finally be in the rear-view mirror.

‘People know prices are still rising, you can’t do your weekly shop without accepting that, but the moment at the checkout when the cashier tots up the damage had begun to feel a little less overwhelming.’

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It is not all bad news regarding inflation as food and non-alcoholic beverage prices decreased for the ninth month in a row. In December 2022 the rate was 1.6% while it came in at 0.5% for December 2023. The 12-month rate was 8%, a 1.2% drop from November. In fact, it is the lowest the figure has been since April 2022.

Milk, cheese and egg prices rose by 0.5% on the month, significantly less than the December 2022 rise of 4.1%. The annual rate came to 3.3% which is the lowest this figure has been since October 2021. Meat, fish, sugar and jam also contributed to the decrease while bread and cereals were the only negative impact.

Sarah Coles, head of personal finance at Hargreaves Lansdown said: ‘This bounce in inflation isn’t a massive movement, and isn’t dramatically different to the forecasts, but it’s a surprise, and the markets really don’t like surprises. It’s a salient reminder that inflation is likely to trend downwards from here, but not particularly fast, and with plenty of bumps along the way.

‘Cigarettes and alcohol were our undoing, up 12.9% in a year. The price rise owes an awful lot to the rise in tobacco duty, which meant tobacco prices were up 16%.’

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