The uneven dynamics of beerflation: inflation, crisis effects, and beer excise taxation in Europe

Beer is a consumer good with deep cultural roots, yet it faces criticism as an alcoholic beverage. Its production depends heavily on energy, agricultural, and retail market shocks. This paper investigates whether beer prices follow overall inflation or exhibit distinct inflationary dynamics, particularly during multiple crises. Using monthly panel data for 27 European countries from January 2015 to December 2025, we construct a novel beerflation index and apply k-means clustering to identify country-specific price patterns. We estimate Common Correlated Effects Mean Group (CCE-MG) and Dynamic Common Correlated Effects Mean Group (DCCE-MG) models to assess the relationship between beer prices and the Harmonised Consumer Prices Index (HCPI). Beer excise taxation is examined separately using annual first-log-difference two-way fixed-effects models. The average tax elasticity is positive but economically small, with no evidence of changes after 2020. Results reveal strong one-to-one co-movement between beer prices and the HCPI before 2020, consistent with beer behaving like a standard consumer good. During subsequent crises, this relationship weakened substantially, while cross-country heterogeneity increased. Clustering identifies five distinct groups, including extreme outliers such as Estonia. Overall, multiple crises reshape long-run price dynamics in European beer markets.