Inflation at 0.4% after Chancellor's meal deal ends

Oct 17, 2020

Inflation at 0.4% after Chancellor Rishi Sunak’s Eat Out to Help Out deal ends

By Dan Atkinson, Financial Mail on Sunday

Published: 16:50 EDT, 17 October 2020 | Updated: 16:50 EDT, 17 October 2020

Inflation is tipped to rebound to 0.4 per cent in statistics due out this week. 

The September surge in the Consumer Prices Index – which stood at 0.2 per cent in August – will in part reflect the end of the Eat Out to Help Out meals discount scheme. 

Rise: The September surge in the Consumer Prices Index will in part reflect the end of Rishi Sunak's Eat Out to Help Out meals discount scheme

Rise: The September surge in the Consumer Prices Index will in part reflect the end of Rishi Sunak’s Eat Out to Help Out meals discount scheme

This relatively modest increase is expected to be followed by a much more substantial rise next year, according to the ITEM forecasting club, which uses the Treasury’s computer model of the economy. 

And two top economists predict that over the longer term, inflation in the UK could return to annual rates of five to 10 per cent. 

Charles Goodhart, ex-member of the Bank of England’s Monetary Policy Committee, and Manoj Pradhan, ex-managing director of Morgan Stanley, say the spike will be fuelled by more bargaining power for labour as globalisation goes into reverse postCovid – with central banks reluctant to hike interest rates. 

On average, City and academic economists predict the CPI to rise from 0.8 per cent this year to 1.5 per cent next year. 

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