Prague Faces Surge in Beer Prices as VAT Shifts from New Year

As the New Year unfolds, so does a change that’s leaving beer enthusiasts in Prague with a bitter aftertaste.

The shift in VAT on draught beer, effective from January 1st, has prompted several establishments in the city to raise their prices, causing concerns among locals and expats alike.

Last autumn, many businesses in Prague adjusted their prices in response to an earlier hike by breweries. However, the recent government package, relocating VAT on draught beer from the abolished ten percent to a basic rate of 21 percent, has triggereddraft beer prices czechia a new wave of price adjustments.

In the city center, some establishments now charge over CZK 70 for a pint of 12-degree draught beer, with others closely approaching this threshold.

According to data from Dotykačka, a company that analyzes cash register data, Prague restaurants were selling a pint of 12-degree beer for an average of CZK 64.30 in July 2023. However, by the beginning of 2024, this average had dropped to CZK 58.80.

In the first week of January, Prague businesses that adjusted prices typically increased charges by three or four crowns for a pint of Pilsner compared to December.

Nevertheless, some outliers, like a business on Národní třída, raised prices by a significant eight crowns, setting a new precedent at 76 crowns per pint.

Similarly, establishments near I. P. Pavlova experienced price hikes, with one restaurant now charging CZK 67 for a pint of Pilsner, marking a four-crown increase from December.

Even areas like Nusle are witnessing prices inching towards the 70 crowns mark. A pub on Náměstí Generála Kutlvašra increased its prices by four crowns since December, now offering a pint of Pilsner for CZK 65.

Luboš Kastner, who represents the gastronomy section of Czechia’s Association of Small and Medium Enterprises (AMSP) told CNN Prima: “Far from Prague and Brno, [the VAT increase] is being transferred gradually and they are waiting to see what will happen.”

Kastner also noted the impact on businesses in smaller municipalities, where pubs and restaurants may struggle to stay afloat with the added cost. In some cases, these establishments may need to choose to close until the spring, when they hope to resume operations.

Moreover, Kastner drew attention to the impact of the last two years’ brewery price hikes, with Plzeňský Prazdroj raising prices by an average of six percent in October last year. Budějovický Budvar and Humpolecký Bernard also joined the trend in November and December, increasing prices by five to eight percent.

As businesses adapt to the new VAT rate, the extent of how much it will affect Prague’s gastronomy industry and its consumers remains to be seen.