UK inflation rises to 0.5%

The UK’s headline rate of inflation climbed to 0.5% last month as restaurants, pubs and cafes raised their prices following the end of the Eat Out to Help Out scheme.

Designed to support the catering sector after months of lockdown due to Covid-19, the discount meals scheme offered 50% off food and non-alcoholic drinks up to £10 during August. More than 100 million meals were bought through the scheme.

The Consumer Prices Index (CPI) began rising more quickly in September when the scheme came to an end, according to the latest report from the the Office for National Statistics (ONS).

In catering services, prices rose by 4.1% between August and September 2020, compared with a rise of 0.2% between the same two months in 2019.

Transport costs also went up in September as demand for second-hand cars increased.

The price of second-hand cars rose by 2.1% between August and September 2020, compared with a 1.4% fall between the same two months a year ago.

Despite the higher CPI, inflation remains below the Bank of England’s 2% target and analysts believe that the Monetary Policy Committee may decide on additional monetary stimulus measures next month to help boost the economy.