If Japanese rice wine is called Sake then why is a liquor shop called a Saka-ya?

Question

Or is it just my dictionary that made a mistake?

Answer 1

Your dictionary is correct. Knowing the history of words is not my specialty, but I think I have something to contribute as a fellow learner, anyway...in present day Japanese, you could say kanji have multiple readings that depend on the context in which they are used. That is, it depends on the word in which the kanji is included, and/or if other words/grammar constructs are present in a sentence. (See this jisho page and notice the multiple readings)

In the case of 酒, the kanji is read as "sake". And 酒屋 is read as "saka-ya". Obviously, "sake" is not the same as "saka", so this particular word would be one of those situations to memorize.