UK inflation rose 0.5% last month to support the scheme after the end of Eat Out.
New data from the ONS Consumer Price Index (CPI) showed that inflation rates would increase from 0.2% in August to 0.5% in September.
The rise of restaurant food and transport helped boost the levels of inflation. ONS explained:
“Transportation costs, and restaurants and cafe prices, have now reached the largest upward contribution (0.23 and 0.21 percentage points, respectively) to change in inflation rates for the August-September 2020 August-September 2020, to support the scheme following the end of EAT OUT.
“This was partially offset by smaller downward contributions from furniture, home equipment and maintenance. Games, toys, hobbies. Food and non-alcoholic beverages.”
The eating out scheme was implemented by August to eat, with over 100 million meals being purchased.
Jonathan Atow, assistant statistician for economic statistics at ONS, said airfares usually have a much higher impact on inflation during this period.
“Airfares will usually drop significantly at this point due to the end of school holidays, but prices have been kept down this year, and as few people travel abroad, the price decline hasn’t been that important,” he said.
Despite the rise, inflation is well below the 2% target set by the Bank of England.
According to Paul Dales, a British economist at Capital Economics, central banks are likely to introduce new measures to boost the economy next month.
“With CPI inflation in September at just 0.5%, it’s difficult to think of why the Bank of England won’t launch a QE of around £100 billion at its November meeting. And even though public borrowing is still jumping, the government may still spend more,” Dale said.
