A new beer index to take the pulse of inflation | markets

Galloping inflation is pushing the production costs of companies to the limit and triggering spending on the shopping basket of families. And there is a mass consumption product that combines both phenomena: beer. The cost of producing it has increased by 62% in the last two years, according to the Beer Index created by the eToro investment platform. It is an index

simple weighted price based on current spot prices for a basket of six commodities needed to produce and sell beer: wheat, barley, rice, malt, aluminum for cans, and gasoline for transportation and agriculture.

Everything necessary for the production and consumption of a beer is at the center of the perfect storm of inflation. Its cost has skyrocketed especially in the last six months, as a result of the war in Ukraine. Gasoline, necessary for growing beer ingredients as well as transporting the product, has seen the biggest price increase of any item in the beer basket, taking off 138%.

Meanwhile, the costs of barley and malt have also skyrocketed, increasing by 104% and 87% respectively in the same period. Also, largely because of the disruption caused by the war. Russia and Ukraine are estimated to supply up to 30% of world barley exports.

Rice is the only commodity in eToro’s Beer Index to hold its price steady, thanks to production outpacing demand every year for the last 15 years, leading to large stockpiles.

Ben Laidler, Global Markets Analyst at eToro, explains that “the average price of a pint of beer has increased by 8% in the last two years, four percentage points below the general rise in inflation. However, our beer index tells us that stronger price pressures are building and further price increases could be expected.” Certainly bad news for Oktoberfest, which starts in a couple of weeks, and for the soccer World Cup, which starts in December.

Beyond beer, the price of food is registering a general increase in the face of political initiatives, such as the proposal by Vice President Yolanda Díaz, to create a shopping basket with a fixed price in agreement with the suppliers.


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