Yesterday the Prime Minister was very excited about achieving the first one of his top five priorities – halving inflation before the years end, with Consumer Price Inflation (CPI) now down to 4.6% Rishi claimed the credit for what was largely down to global energy prices falling. Most people know governments can drive up inflation by printing money and proliferating spending, which to be fair to Sunak and Hunt they are holding the line on. Not everyone realises that consumer taxes also contribute to the CPI figure. In fact according to the Office for National Statistics* alcohol taxes contributed over a third of a percentage point to inflation.

If the government want to convince the public they are taking effective action on the cost of living they should not be adding to inflation in the Autumn Statement next week with consumer taxes. According to Survation 55% of the public think taxes on alcohol should remain at current levels or be reduced, so any action to reverse or at least hold the line on alcohol duty would be seen by voters as action on the cost of living and would be counter-inflationary. It would also reduce the CPI figure and help reach that 2% goal…

*The ONS paper  “…the 0.37 percentage point contribution to the annual rate in August 2023 from alcohol and tobacco was the largest from that division since the start of the National Statistics series in 2006.”