Eat Out to Help Out knocks inflation to weakest level in five years

The UK’s inflation rate fell sharply to 0.2% in August as a result of Eat Out to Help Out.

The scheme, introduced by chancellor Rishi Sunak to get people spending money in the hospitality sector, pushed down restaurant prices.

Inflation in July was 1%, meaning the huge drop is one of the biggest falls in the annual inflation rate in recent years. It is at its weakest level since 2015.

The Office for National Statistics (ONS) also said the cut in VAT from 20% to 5% in the hospitality sector also contributed to the big drop in inflation.

‘The cost of dining out fell significantly in August thanks to the Eat Out to Help Out’scheme and VAT cut, leading to one of the largest falls in the annual inflation rate in recent years,’ deputy national statistician at the ONS, Jonathan Athow, said.

‘For the first time since records began, air fares fell in August as fewer people travelled abroad on holiday. Meanwhile the usual clothing price rises seen at this time of year, as autumn ranges hit the shops, also failed to materialise.’

Air fares fell in August for the first time on record to encourage Brits to go on holiday in the summer when many of them chose to remain in the UK.

Clothes prices also fell back as retailers held off from rising prices for the usual autumn selling season, to encourage people back into the high street stores.

The Eat Out to Help Out scheme was introduced from Monday to Wednesday throughout August, offering 50% off meals up to a value of £10 per head. More than 100 million discounted meals were claimed for.

Inflation is calculated by looking at a ‘basket’ of commonly purchased products, and comparing how much they cost now to last month and this time last year.

During the pandemic, the ONS has been unable to identify prices for many of the 720 items it usually monitors.

The ONS said prices for only eight items were still unavailable in August, reflecting parts of the economy still unable to operate normally – including cruises, live music, theatre, swimming pools and soft play sessions.

Get in touch with our news team by emailing us at [email protected].

For more stories like this, check our news page.

Source: