Sales of beer rose by 55 million pints last year but there was a dip in beer sold at the pumps.
Research by the British Beer & Pub Association (BBPA) shows that overall beer sales rose by 0.7 per cent but that the on-trade saw a 2.4 per cent decrease.
The drop in sales is the biggest since 2013 and equates to 88 million pints.
The trade body pointed to a 3.9 per cent duty increase in March and hikes in business rates and operating costs as reasons for the decline.
BBPA chief executive Brigid Simmonds said: "Whilst it is encouraging to see beer sales rise slightly in 2017, it is still hugely concerning to see on-trade sales fall for the seventeenth year in a row.
"This shows just how important the decision to freeze beer duty in the Autumn Budget was, particularly after an inflation-busting 3.9 per cent rise in the Spring Budget.
Cutting beer duty is hugely important to community pubs where on average 70 per cent of alcohol sold is beer."
- Check out our feature on the cask beer market.