Business

UK inflation rises to 0.5% after EOTHO ends

UK inflation for the month of September increased to 0.5% after the end of the Government’s Eat Out to Help Out scheme pushed up prices, according to the latest figures from the ONS.

The figure is up from 0.2% in August where prices were driven down by the discount scheme. The downward contribution from the restaurants and hotels group fell to 0.07 percentage points in September, down from 0.27 percentage points in August.

Another driver behind the increase was found to be transport, which had an upward contribution for the first time since March.

The ONS said the change was a result of a larger upward contribution from the purchase of second-hand cars, where prices have “potentially been boosted” by increased demand as people look to reduce their reliance on public transport.

There were also reductions in the size of the downward contributions from both airfares and, to a lesser extent, the operation of personal transport equipment (including fuels and lubricants). Average petrol prices stood at 113.3 pence per litre in September 2020, up from 113.1 pence in August but below 127.3 pence recorded in September 2019.

In addition, this month’s figures can be seen to be of greater importance as the Government determines business rate rises for the following financial year (2021/22) with the Uniform Business Rate (pence in the pound tax rate) increased annually in-line with inflation.

As such, according to forecasts from the real estate adviser the Altus Group, the headline rate of inflation of 0.5% signals that gross business rates bills next year for 2021/22 will increase by £159.42m in England, of which £50.12m will be shouldered by the embattled retail sector.

Robert Hayton, head of UK business rates at Altus Group, said: “Government has an opportunity to disprove detractors, showing that the business rates system is in step with reality ensuring appeals to reduce property values because of Covid are accepted quickly, and at the same time, injecting additional targeted financial support to where it is needed most.”

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