I remember the first time I bought a pint of bitter – when slightly underage – in 1976. It cost 21p. Now, obviously there has been a great deal of inflation since then, so it’s not surprising that the equivalent pint is now around £2.40, or more than ten times more. But how does that compare with the general movements in prices?
I recently came across an interesting website called Measuring Worth, which allows you to input a monetary value from any time in the past and find out what the equivalent is in present-day terms. And, it turns out that the 21p in 1976 was, in 2008, worth £1.13 in terms of the Retail Prices Index, and £1.79 in terms of average earnings. So, by whatever measure you choose, a pint of beer in the pub is actually considerably dearer than it once was.
Now, over time, you would expect the prices of things with a strong component of service (such as meals and drinks in pubs and restaurants) to increase more quickly than those in shops, because as living standards rise, wage costs rise more quickly than the cost of goods. But, even so, it is clear that the prices of drinks in pubs have risen more quickly even than average earnings, and this must have played a part in the relative decline of the on-trade against the off-trade. It could be said that the pub trade as a whole has been short-sighted in constantly pushing through year-on-year above inflation price increases and not realising that the short-term fix of increased revenues was in the long term undermining their business.
In contrast, drinks prices in the off-trade have probably risen roughly in line with price inflation. But it’s not that alcohol is underpriced in the off-trade, but overpriced in the on-trade.