The increase in excise duty on alcoholic beverages and tobacco took effect this week. The average price increase for beer is between 10%-12%. This is positive for the government as it would generate more revenue and lead to a lower fiscal deficit.
The price increase would have a muted impact on headline inflation as alcoholic beverages and tobacco account for 1.1% of the consumer inflation basket tracked by the National Bureau of Statistics. The downside is that some distillers and brewers would likely lay off staff due to reduced demand.
The attached bulletin addresses these and other issues in the domestic and global commodities market.
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