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Inflation fell to 0.2% last month as the Eat Out To Help Out scheme drove prices down at restaurants and cafes, new figures show.
It was the lowest level of inflation for the Consumer Price Index (CPI) since December 2015 and a sharp drop from the 1% rate recorded in July.
Falling airfares, the first time they were recorded in August, also contributed to the drop, as did modest increases in clothing prices after the lockdown disrupted the usual patterns of seasonal fashion sales.
ONS figures pointed to a 2.8% year-on-year drop in prices for the restaurant and hotel sector, the first negative reading for this category since records began in 1989.
Eat Out To Help Out, the taxpayer-backed scheme offering 50% discounts on meals, was the main reason for the decline, while also contributing a VAT reduction for the hospitality sector from 20% to 5%.
Jonathan Athow, ONS Deputy National Statistician for Economic Statistics, said: “The cost of dining out fell significantly in August thanks to the Eat Out to Help Out program and the VAT cut, causing one of the largest drops in the annual inflation rate in recent times years.
“For the first time since the records began, airfares fell in August as fewer people traveled abroad on vacation.
“Meanwhile, the usual clothing price hikes seen this time of year, as the fall ranges hit stores, didn’t materialize either.”
