Why the price of a pint of beer in the UK is going through the roof

LONDON — The average cost of a pint of beer in the U.K. has soared by 70% since 2008 — well ahead of inflation — and some Londoners are parting with as much as £8 ($9.70) for 568ml of the amber nectar.

According to figures from consultancy firm CGA, the average cost of a pint has risen from £2.30 in 2008 to £3.95 in 2022, though prices vary drastically across locations. Average prices rose by 15 pence between 2021 and 2022, up almost 4%, one of the largest year-on-year increases since 2008.

The average price of a pint at one unnamed pub in London hit an eye-watering £8.06 this year, the highest CGA has ever recorded, while the lowest nationally was a £1.79 average at a pub in Lancashire, in the northwest of England.

U.K. inflation hit a 40-year high of 9.4% in June and is expected to rise beyond 13% in October, compounding the country’s historic cost-of-living crisis and prompting the Bank of England to implement its largest interest rate hike since 1995 on Thursday.

Many pubs and hospitality venues are concerned that consumers will increasingly stay at home.

Paul Bolton, client director for GB drinks at CGA, told CNBC that a combination of supply chain issues, staffing shortages, soaring energy costs, lingering pandemic-era debts and generally high inflation are increasing suppliers’ cost pressures, which then have to be passed onto the consumer.

Raw materials and energy

Francois Sonneville, senior beverage analyst at Rabobank, told CNBC that prices are increasing throughout the value chain, starting with barley.

“The barley price has gone up, and has doubled since 2021. There’s two reasons for that: one is that the harvest in North America was really poor, driven by a poor climate, so there was not much inventory to start with – and then, of course, we had the Black Sea region conflict,” he told CNBC’s Arabile Gumede.

Historically, when grain prices increased, farmers would compensate by planting more the following year, but broader agricultural inflation is also putting a squeeze on farms, outpacing even the 40-year high of 9.4% headline inflation in the U.K.

“Where our normal inflation is running at 8, 9%, (agricultural) inflation for our businesses is running somewhere over 22, 23%,” explained Richard Hirst, owner of Hirst Farms in Suffolk.

“That’s a function of obviously oil prices, fuel – our tractor diesel has gone up more than three times in price, which is a lot more, relatively, than road fuel has gone up.”

Hirst said the farm is also facing substantial labor cost increases, with shortages affecting the farming industry nationwide, along with fertilizer costs.

“Fertilizer costs will have tripled for next year – we’re buying fertilizer now three times what it was last year. Our…