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Britain’s restaurant subsidy scheme pushes UK inflation to near 5-year low

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Britain’s restaurant subsidy scheme to support the hospitality sector through the COVID-19 pandemic helped to push the country’s inflation rate down to its lowest rate in almost five years, official data showed on Wednesday.

Consumer prices rose by 0.2% in annual terms in August, the smallest increase since December 2015 and slowing sharply from July’s 1.0% increase, the Office for National Statistics (ONS) said.

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

Last month discounts for more than 100 million meals were claimed through the government’s “Eat Out to Help Out” programme, which offered diners a state-funded price reduction of up to 10 pounds ($12.89).

Prices in restaurants and cafes were down 2.6% compared with August last year, the first time they had been negative since records began in 1989, the ONS said.

Falling air fares and a smaller-than-usual rise in clothes prices also helped to push annual inflation down.

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

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

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