THE Consumer Price Index (CPI) rate of inflation was the lowest recorded since December 2015 as Rishi Sunak’s scheme had a major impact on the economy.
The Office for National Statistics (ONS) said the Consumer Prices Index tumbled from 1 per cent in July to 0.2 per cent in August – which is the lowest rate since December 2015. Chancellor Rishi Sunak’s popular Eat Out to Help Out discount last month to encourage people to eat out again after the lockdown was the biggest driver in pushing down the rise in the cost of living. It did this by slashing prices in restaurants and cafes and encouraging people to eat out more. The ONS also said the cut to Value Added Tax (VAT) on hospitality and tourism from 20 per cent to 5 per cent together had a great effect in helping lower inflation.
The most recent figures from the Treasury estimated that Britons ate more than a staggering 100 million meals last month as part of the Eat Out to Help Out discount scheme. Diners received a state-backed 50 per cent discount on meals and soft drinks up to €11.20 (£10) each between Mondays and Wednesdays in August in a bid to boost the hospitality sector. The ONS said inflation in the restaurants and hotels sector fell by 2.8 per cent last month, marking the first time it has been negative since records began in 1989.
While it was a one-month only impact on inflation, Samuel Tombs, at Pantheon Macroeconomics, said, quote: “CPI was set to remain comfortably below 1 per cent in the remaining months of this year. He added: “Firms in the services sector likely will have to absorb higher Covid-19 related costs, rather than pass them on to consumers, in the face of lingering weakness in demand. Accordingly, we expect the headline rate of CPI inflation to average just 0.6 per cent in the last four months of 2020.”