EOHO helps pull down inflation but sector still at risk of 'bloodbath'

By Mathew Lyons

Published: 16 September, 2020

The success of the government’s Eat Out to Help Out scheme in August helped push the UK inflation rate to a five-year low, according to data from the ONS.

Inflation fell from 1% in July to just 0.2% in August, with restaurant and cafe prices 2.6% below their level in August 2019. It is the first time prices have fallen since records began in 1989, the BBC is reporting.

Over 100 million meals were ordered through the initiative, which offered consumers 50% off the price of a meal, up to the value of £10, when eaten on-premise from Monday through to Wednesday each week.

The cut in VAT for the hospitality sector was another contributory factor to August’s low inflation, the ONS has said. Chancellor Rishi Sunak has slashed VAT from 20% to 5% between 15 July 2020 and 12 January 2021.

Despite the success of Eat Out to Help Out and the relief offered by measures such as the VAT cut, the hospitality sector remains in crisis.

UKHospitality has called on the government to extend its current ban on evictions, which expires on 1 October.

Introduced during the pandemic, the ban prevented commercial landlords taking legal action against tenants, including thousands of restaurants, bars and pubs, which have been unable to meet rental payments during the lockdown.

Kate Nicholls, chief executive of UK Hospitality, has predicted a “bloodbath” if the government fails to extend the moratorium until the end of March 2021.

Nicholls is also concerned that the government’s latest social distancing restrictions, introduced on Monday, will undo the good work that the Eat Out to Help Out scheme did in rebuilding consumer confidence in the sector.

"The prime minister simply must make clear that hospitality venues are safe to visit, provided that businesses and customers work together to implement social distancing guidelines,” she told the Daily Telegraph.

A quarter of UK licensed premises – amounting to nearly 27,000 venues – have yet to reopen, according to data from CGA.

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