Log in
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Dynamic quotes 

MarketScreener Homepage  >  News  >  Economy & Forex

News : Latest News
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance Pro.CalendarSectors 
All NewsEconomyCurrencies & ForexEconomic EventsCryptocurrenciesCybersecurityPress Releases

UK diner discounts push inflation to near five-year low

share with twitter share with LinkedIn share with facebook
09/16/2020 | 07:13am EDT
FILE PHOTO: Staff work at Hawksmoor, on the opening day of

A hefty drop in restaurant prices, spurred by Britain's scheme to support the hospitality sector through the COVID-19 pandemic, helped to push inflation down last month to its lowest rate in almost five years.

Consumer prices rose by 0.2% in annual terms in August, the smallest increase since December 2015 and a sharp slowdown from July's 1.0% increase, the Office for National Statistics (ONS) said on Wednesday.

A Reuters poll of economists had pointed to a reading of 0.0%.

Discounts for more than 100 million meals were claimed via the government's "Eat Out to Help Out" programme, which offered diners a state-funded price reduction of up to 10 pounds ($12.89) between Mondays and Wednesdays in August.

Prices in restaurants and cafes were down 2.6% compared with August last year, their first fall since records began in 1989.

While this prompted an unusually large fall in the rate of inflation, the shock of the coronavirus pandemic on the economy and a coming surge in unemployment look likely to keep consumer prices in check.

A cut in value-added sales tax in the hospitality sector - another part of the government's emergency plans - plus falls in air fares and a smaller-than-usual rise in clothes prices also helped to push annual inflation down.

"While we expect an initial bounce-back in inflation in September, as the 'Eat Out to Help Out' scheme comes to an end, overall inflation is likely to remain well below the Bank of England's target for some time," said Yael Selfin, chief economist at KPMG.

The consumer price index has now been below the BoE's target for 13 months in a row.

Most economists polled by Reuters think sharply rising unemployment and a slowing recovery will prompt the BoE to pump more stimulus into the economy before the end of this year. [ECILT/GB]

The ONS said eight items in the inflation basket were still unavailable to its price collectors, reflecting things that remain off-limits, such as tickets to the theatre, soccer matches and horse racing, and catering for more than 50 people.

In April, during the most stringent period of the lockdown, 90 items had been unavailable.

There were already signs that inflation pressure would remain weak.

Factory output prices fell for the fifth month in a row in annual terms - the longest such run in four years - as weaker oil prices pushed them down by 0.9%.

Excluding oil and other volatile components, core factory output prices showed no change in annual terms, their weakest showing in nearly five years.

Separate data provided official confirmation of a surge in the housing market as the economy reopened in June.

Average British house prices jumped 3.4% in the year to June to reach a new record high of 238,000 pounds.

More timely surveys have suggested the upswing has continued through to this month but industry officials have warned the mini-boom could turn into a bust before long, given the state of the economy.

($1 = 0.7724 pounds)

By Andy Bruce and William Schomberg

share with twitter share with LinkedIn share with facebook
Latest news "Economy & Forex"
05:55pSTATISTICS NEW ZEALAND : Education sector lifts August job numbers
05:44pEXCLUSIVE : ArcelorMittal in talks to merge U.S. assets with Cleveland-Cliffs
04:50pArcelormittal sa in talks to merge its u.s. operations with cleveland-cliffs inc -sources
03:59pTikTok Awaits Judge's Ruling on Whether U.S. Can Ban Downloads
03:06pJudge plans to decide on TikTok U.S. app store ban by end of day
02:11pValue of U.S. commercial property slashed by 27%, Financial Times reports
01:50pBMW : claims 20th overall victory at the Nürburgring 24 Hours – Nick Catsburg, Alexander Sims and Nick Yelloly triumph in the ROWE Racing BMW M6 GT3.
01:47pChile's president launches $2 billion plan to bring back jobs lost during pandemic
01:31pFrance's Macron says he will keep pushing initiative on Lebanon
01:28pMali president names diplomat Moctar Ouane as interim prime minister
Latest news "Economy & Forex"