New research from the Scotch Whisky Association (SWA) has found that the price of alcohol made a significant contribution to inflation during 2025, adding to concerns that consumers will face higher prices for goods in the lead-up to the festive season.

Research conducted by the trade body, which represents the UK’s largest food and drink export, also indicates that government borrowing is likely to rise sharply in line with further increases to alcohol duty.

Analysis of recent figures from the Office for National Statistics (ONS) confirms that alcoholic beverages alone accounted for £3 in every £100 of inflation rises in the year to August 2025. This follows a 14% rise in alcohol duty over the past two years, meaning that around three-quarters of the price of an average bottle of Scotch whisky is paid in tax.

The Scotch whisky and wider spirits industry, along with its extensive supply chain, have been urging the Chancellor, Rachel Reeves, to take urgent action to halt what they describe as “damaging rises” in alcohol duty. Such a move, they argue, would support the industry and stimulate cross-sector growth.

Further analysis suggests that for every 1% increase in alcohol duty announced in the forthcoming Budget, government borrowing costs will rise by £90 million next year. A decision to support spirits such as Scotch whisky through targeted measures in the Autumn Budget would leave the sector better placed to drive growth, while saving the public purse over £300 million.

The Scotch Whisky Association has consistently pointed to the government’s own figures, which show that two years of duty rises have resulted in Treasury revenues falling £600 million short of OBR forecasts. With consumer confidence in crisis, recently published data from HM Treasury also reveals that revenue from spirits duty was down 17% in September compared with the same period last year.

Commenting on the findings, Mark Kent, Chief Executive of the Scotch Whisky Association, said: “The numbers are compelling: increasing alcohol duty drives up prices for consumers, undermines business confidence, and drains public finances. The Chancellor herself has said she is not satisfied with recent inflation levels, and this research shows just how much soaring spirits taxes contribute to those figures.”

He went on to say: “The wide-ranging support we’ve seen across sectors for action on spirits duty is testament to the damage that repeated duty hikes inflict on businesses’ growth prospects and stability. A freeze on excise duty in the Autumn Budget would not only give businesses confidence in their domestic market, but also ease the burden on consumers in the run-up to the festive season and reduce Treasury borrowing costs in 2026 and beyond.”

The findings come at a time when the UK Government is under significant pressure to deliver growth and ease the strain on consumers amid a flatlining economic outlook, with recent figures showing inflation holding steady at 3.8%. Excise duty remains one of the few policy levers the UK Government can directly use to influence inflation.