Inflation at lowest rate since 2015- But what does that mean for you?
The inflation rate in the UK has fallen to its lowest rate in half a decade following the Chancellor of the Exchequer's 'Eat Out to Help Out' scheme in August. This headline has been tossed around for some time now, but what does this actually mean for you and your money?
Let's start with Inflation. What is it and how does it work?
Inflation is a measure of how much price of goods and services have changed over time.
The Office for National Statistics has now published that the UK's current rate of inflation has reached a 5 year low of 0.2%.
Inflation is a key measure of the financial health of a nation, meaning that it affects what consumers can buy for their money.
An increase in inflation rates will mean that your money won't go as far as it once did - if inflation goes up, so does the price of goods and services.
The target rate of inflation for 2020 is set at 2%, however with the plunge to 0.2% in August this leaves quite a hill to climb.
Core inflation, which excludes the costs of energy, alcohol, food and tobacco, slumped to 0.9% in August from 1.8% in July.
Prices in restaurants and hotels shrunk by 2.8% in August, compared with the same month in 2019.
With this drop in inflation, what does it mean for the UK?
In short, this mean that prices are 0.2% higher now compared to the same time last year, but overall prices are down in the year in August compared to in the year to July.
It has been said that the main driving force for this dip in inflation is the 'Eat Out to Help Out' scheme, as well as the VAT cuts enforced by Rishi Sunak earlier this year.
Due to the ongoing Covid-19 crisis, consumer confidence is low with people going out less, and in turn, spending less money. This was further compounded with people spending half of what they usually wo