UK inflation in record August jump as food and drink prices rise

UK inflation made its biggest jump on record in August amid a rise in food and drink prices, reversing a sharp decline a year earlier during the government’s eat out to help out restaurant discount scheme.

The Office for National Statistics (ONS) said the consumer prices index measure of annual inflation rose to 3.2% in August, up from 2% in July, as the cost of a meal snapped back from a period of steep discounting a year ago.

The increase in prices surpassed City economists’ forecasts for a rate of 2.9%, and the 1.2 percentage point increase between July and August’s figures was the largest since detailed records began in January 1997.

The ONS said the rise was likely to be temporary as the reading had been heavily distorted by Rishi Sunak’s discount scheme, which offered customers half-price food and drink between Monday and Wednesday in August 2020. Inflation is calculated based on the annual change in price for a basket of goods and services.

The statistics agency said stripping out the impact of the scheme, which was designed to stimulate economic activity after the first coronavirus lockdown, would have reduced the inflation rate by 0.4 percentage points.

However, there were also sharp increases for a range of other goods and services, including food and drink in supermarkets, petrol prices, secondhand cars and computer games and CDs.

The ONS said food and non-alcoholic drinks prices rose by 1.1% on the month in August, the highest rate of growth since 2008, reflecting the impact from supply chain disruption amid shortages of lorry drivers and higher global freight costs.

Bridget Phillipson, the shadow chief secretary to the Treasury, said the figures showed that families would be hit hard by the government’s plan to cut universal credit and raise national insurance.

“People are already feeling the effects of inflation, in their weekly shop and at the petrol pump,” she said.


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