Is Inflation Coming for Your After-Work Beers?

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Higher prices mean people are buying fewer beers. 

There are some signs that inflation may be cooling, or at least coming off the boiling point we saw at points last year. All the same, a slowdown in price increases doesn’t impact all of our spending equally. In fact, the prices of some items — such as beer and even eggs — continue to rise even while others fall.

Analysis of Nielsen data by Bump Williams Consulting showed average beer prices rose more than 7% in the 12 weeks before Christmas, more than they did the year before. The cost of some brands, such as Bud Light, Miller Lite, Yuengling Lager, and Coors Light rose by as much as 10%.

Data from the Bureau of Labor Statistics backs this up. Beer at home was 1.8% more expensive in November than October, while prices of ordinary food items only increased by 0.2%. This was a much bigger price jump than other alcoholic beverages at home. Wine prices actually fell by 0.2% month on month and spirits increased by just 0.9%.

Why is beer getting more expensive?

There are a few reasons why your favorite brew costs more than it did six months ago. For starters, the industry isn’t immune to the supply chain issues and higher energy prices that have impacted other products. On top of this, the cost of hops has increased because of droughts in some parts of the world, and the Russia-Ukraine conflict has impacted barley production.

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

Rising prices have already translated into a reduction in consumption. Beer is often considered recession-proof, especially at home. It’s one of those little luxuries that people may continue to buy even as they cut back on bigger expenses such as vacations or new cars. Even so, the recent price increases proved too much for some consumers who bought less in December. Bump Williams Consulting said sales of premium beer Michelob Ultra rose 0.8% throughout the year, but fell off by 2.3% in the month before Christmas.

Everything in moderation

I’m a Brit and drinking is so ingrained in our national psyche that it almost pains me to write this. But beer is not an essential item. In fact, even if beer prices weren’t going up, cutting down on after-work drinks — whether at home or in the bar — can be a good way to save money.

The trick to any money-saving plan is to make it achievable. If one of the things that brings you joy is to go out for a couple of drinks with friends or open a craft beer at home, don’t cut it out completely. You’ll be miserable and could end up spending more money as a result. Instead, look at your budget and work out what you spend now on beer and what a reasonable beer budget might be.

You might be able to cut costs by switching to a lower-cost brand, or cut back on the amount you drink. Perhaps you’re already trying a dry January, which some say is good for both your bank account balance and health. Let’s say you usually spend $15 a week on alcohol. If you decided to give up alcohol completely, you could save $780 a year.

It might be more realistic to try cutting that figure to $10 a week instead. A $5 reduction in spending could mean $260 a year more in your savings account. It’s not going to pay for a new car, but it could help cushion your finances a little against economic uncertainty.

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