Rishi’s meals discount sees inflation fall to 5-year low

CHEAPER meals under the Eat Out to Help Out scheme saw prices rise at their slowest rate in five years last month.

Inflation fell to 0.2 per cent in August – the lowest rate since December 2015 – from one per cent a month earlier, said the Office of National Statistics (ONS).

The eating out scheme, introduced by chancellor Rishi Sunak (pictured), ran from Mondays to Wednesdays, offering 50 per cent off food and soft drinks to the value of £10. State-backed discounts for more than 100million meals were claimed and inflation in the sector fell 2.8 per cent last month as a result – the first time it has been negative since records began in 1989.

Cutting VAT from 20 to five per cent for the hospitality and tourism sectors also helped lower inflation, said Jonathan

Athow, of the ONS. The Consumer Price Index, used to track the cost of goods and services, revealed air fares fell in August for the first time on record – down 20.6 per cent year-on-year – as more Britons holidayed at home in the pandemic.

And the cost of clothes remained steady as retailers held off increasing prices for the autumn selling season.

Petrol prices dipped to 113.1p per litre against 128.3p a year earlier, and diesel was around 15p cheaper.

While the eating out scheme will have a one-month only impact on inflation, Samuel Tombs, at Pantheon Macroeconomics, said it would remain ‘comfortably below one per cent’ for the rest of 2020. ‘It’s likely firms in the services sector will have to absorb higher Covid-19 related costs,’ he added.

The Retail Prices Index, a separate measure of inflation, was 0.5 per cent last month, down from July’s 1.6 per cent.