Get all your news in one place.
100’s of premium titles.
One app.
Start reading
Daily Mirror
Daily Mirror
Business
Emma Munbodh

Inflation at its 'lowest in years' after Brits claim 100m Eat Out to Help Out meals

The UK's inflation rate fell in August after Brits took advantage of 100million discounted meals through Eat Out to Help Out.

The cost of living tumbled to 0.2% in August from 1% in July, marking the lowest rate since December 2015, the Office for National Statistics said.

It said the sharp drop was also due to fewer people travelling abroad over summer, with more households taking advantage of staycation breaks.

Jonathan Athow, deputy national statistician at the ONS, said: "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."

The VAT cut - which is in place until January - means value added tax has been slashed to 5% across the hospitality sector.

"For the first time since records began, air fares fell in August as fewer people travelled abroad on holiday.

Holiday prices have fallen significantly due to a sharp drop in demand on the back of the pandemic (Getty)

"Meanwhile the usual clothing price rises seen at this time of year, as autumn ranges hit the shops, also failed to materialise."

Clothes prices also fell back as retailers held off from rising prices for the usual autumn selling season.

Inflation is the rate at which items increase in price. The consumer prices index (CPI) compares monthly costs to identify any dramatic changes in between.

It's one of the key measures of financial wellbeing because it affects what consumers can buy for their money. If inflation is high, money doesn't go as far.

For example, if the inflation rate for travel is 2% in a year, households will need to spend 2% more to go abroad that year.

And if wages don't keep up with inflation, purchasing power and the standard of living falls.

A little inflation, however, typically encourages people to buy products sooner and can contribute towards pay rises.

In the UK, the government has an inflation target of 2%. If inflation falls below this, the Bank of England may take action to help stimulate the economy.

Melissa Davies, chief economist at Redburn, said: "Underlying inflationary pressures are weak in the UK, reflecting large amounts of spare capacity and still-weak demand.

"More stimulus is needed to help the economy catch up to pre-Covid levels of activity, but the furlough scheme is about to expire. An expansionary Autumn Budget plus more from the Bank of England are required.

"The Brexit clock is ticking, pointing to an unpleasant cocktail for the economy over the next 6 months."

Sign up to read this article
Read news from 100’s of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
One subscription that gives you access to news from hundreds of sites
Already a member? Sign in here
Our Picks
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.