Melbourne and Sydney have been ranked as the world’s most expensive cities for beer and cigarettes, with costs in both capitals rising by more than 80 per cent over the last decade. A new report by Deutsche Bank attributes these prices to Australia’s sustained application of “sin taxes.”
A Decade of Rising Costs
The “Oasis index,” compiled by Deutsche Bank, ranks 69 global cities by comparing the cost of five beers and two packs of cigarettes. As of 2026, Melbourne leads the global rankings with a total cost of $US111.20, or approximately $159. Sydney follows closely in second place at $US109.50, or $156.30. These figures represent a dramatic escalation over the last 10 years, with Melbourne’s costs rising by 88.8 per cent and Sydney’s by 81.9 per cent.
The report highlights that the price of a 20-pack of cigarettes in Sydney has jumped 130 per cent in the last decade, while Melbourne has seen a 123 per cent increase. According to the data, these prices are now more than double those found in New York City.
The Impact of Sin Taxes on Public Health
While the rising costs have drawn criticism from industry groups, public health experts argue that the tax policy is achieving its intended goal of reducing smoking rates. Professor Coral Gartner from the University of Queensland notes that price increases are a primary driver for smokers attempting to quit.
Laura Hunter, CEO of the Australian Council on Smoking and Health, added that the nation now maintains some of the lowest smoking rates among high-income countries. This is a remarkable public health achievement and shows what sustained, comprehensive tobacco control can achieve,
Hunter stated. However, despite the decline in smoking, data from the Australian Institute of Health and Welfare indicates that 5.6 per cent of the population continues to smoke, with one in three of those users turning to illicit tobacco products.
Brewers Face Inflation Despite Excise Freeze
The hospitality sector faces a separate set of challenges. While the federal government recently moved to freeze the beer excise for two years starting in August 2025, major brewers Lion and Asahi—which control roughly 85 per cent of the market—have confirmed they are still raising prices on tap beer. Both companies cited rising costs in labor, transport, and materials.
Lion, which produces brands including XXXX Gold and Hahn, described the move as a difficult decision
and confirmed an average price increase of 4.3 per cent. Asahi, the brewer behind Victoria Bitter and Carlton Draught, implemented an increase of under 3.8 per cent. The Australian Hotels Association has responded by recommending that pub operators adjust prices for a schooner of these brands from $9.10 to $9.50 to account for these wholesale hikes.
Industry and Political Fallout
The economic pressure on consumers and small businesses has become a point of political contention. Sabrina Kunz, head of the Independent Brewers Association, warned that the current cost of going out is becoming completely unaffordable
for many Australians. Critics of the current tax regime, including Senator David Pocock, have pointed to the $2.7 billion in revenue generated by the beer excise as a sign of an overly aggressive fiscal approach.
While industry advocates call for tax relief to support struggling hospitality businesses, the federal government maintains its position. Minister Clare O’Neil recently stated that the issue is primarily one of enforcement rather than taxation, arguing that reducing the excise would only serve to benefit tobacco companies while failing to address the underlying market issues driving the illicit trade.
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