UK inflation falls from 1% to 0.2% as prices of clothing and restaurants drop

British inflation slipped to a five-year low of 0.2% in August as the impact of the Eat Out to Help Out programme dumped down restaurant prices.

The consumer price index (CPI) fell to 0.2 per cent in August from July's 1 per cent as clothing and dining prices fell.

Restaurant and cafe prices were 2.6 per cent lower than it was in August last year, marking the first major year in which the record period began in 1989, according to the ONS.

Under the government's plan to relaunch ailing restaurants after shut down the Coronavirus, restaurants and cafes were offering 50 per cent discounted food and booze up to £10 a head.

Inflation is the rate at which prices for services and products rise.

Jonathan Athow, assistant national statistician for the ONS, 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.

Over the past month, more than 100 million meals sold under the Eat Out to Help Out program were eligible for rebates.

The "Eat Out to Help Out" programme involved a VAT reduction from 20% to 5% in the tourism and food sectors, which commenced on 15 July and will remain in force until 12 January 2021.