Eating out scheme pushes down August inflation

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The UK’s inflation rate fell sharply to 0.2% in August as the effect of the Eat Out to Help Out scheme pushed down restaurant prices, figures show.

July’s figure had been 1%.

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

The eating out scheme, which ran from Monday to Wednesday in August, offered 50% off food up to the value of £10.

“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,” said ONS deputy national statistician Jonathan Athow.

“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.”

Inflation is calculated by looking at a “basket” of commonly purchased goods and comparing how much they cost now to last month and to the same time last year.

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

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