Inflation to remain 'under pressure' as consumer demand weakens

CPI at 0.2% in August

The UK Government's Eat Out to Help Out scheme is behind the "sharp drop" in inflation in August to the lowest level since 2015, with investors warned to expect inflation to remain volatile and "under pressure" as consumer demand slows heading into Autumn.

Derrick Dunne, chief executive of Beaufort Investment, said: "The UK is now at risk of near-term negative inflation, albeit likely temporarily, after a very sharp drop in inflation in August which left CPI at just 0.2%." He called the Government's Eat Out to Help Out scheme the "decisive factor", accounting for 0.44 percentage points of the decline from July's Consumer Prices Index (CPI) reading of 1%. "The official CPIH figure showed the same impact, with inflation falling to 0.5%, from 1.1% the previous month, as numerous sectors showed a slump in activity," Dunne added. Markets ...