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Restaurant discount scheme drives sharp fall in UK inflation

16th September, 2020 by Phoebe French

The UK government’s Eat Out to Help Out scheme in August has contributed to the lowest Consumer Prices Index inflation rate achieved since December 2015.
According to a report published by the Office for Nationa…

The UK government's Eat Out to Help Out scheme in August has contributed to the lowest Consumer Prices Index inflation rate achieved since December 2015.

According to a report published by the Office for National Statistics (ONS), the Consumer Prices Index (CPI) 12-month rate was 0.2% last month, down from 1% in July. The report noted how reduced prices in restaurants and cafes, as a result of the scheme, led to the largest downward contribution (-0.44%) to the change in the CPI inflation rate. The reduction in VAT on the hospitality sector (from 20% to 5%) was also said to have contributed to the price cuts.

Prices for catering services fell by 5.7% between July and August this year, compared with a rise of 0.2% in the same two months last year. The ONS said the hotel and restaurant sectors recorded a combined -2.8% 12-month inflation rate in August, the first time the industries have returned a negative rate since 1989. Last month, the Eat Out to Help Out Scheme offered diners a 50% discount on their food and non-alcoholic drinks on Mondays through to Wednesdays, with a cap on reductions of GBP10 per head.

The latest figures show that over 100 million meals were claimed as part of the scheme, with the 84,700 establishments signed up making 130,000 claims worth GBP522 million.

OpenTable data shows that restaurant bookings rote by 53% on average on Mondays, Tuesdays and Wednesdays last month, compared to the same period last year.

Deputy national statistician at the ONS, Jonathan Athow, 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."