Inflation falls unexpectedly to 6.7%

UK inflation fell to 6.7% in the 12 months to August 2023, with the largest downward contributions coming from food and accommodation prices, according to the Office for National Statistics (ONS).

The annual inflation rate for hotels and restaurants was 8.3% in August 2023, down from 9.6% in July, making the latest figures the lowest rate since May 2022.

On a monthly basis, prices dropped by 0.1% between July and August, compared with a rise of 1% between those two months last year.

Meanwhile, food and non-alcoholic beverage prices also eased in the annual rate to 13.6% in August, down from a recent high of 19.2% in March, which was the highest annual rate recorded for over 45 years.

The ONS reported a fall in the prices of milk, cheese, vegetables and fish.

However, Michael Kill, chief executive of the Night Time Industries Association, warned the drop in inflation “is not telling the true story” across all sectors of hospitality.

He said: “Our businesses are grappling with ongoing business-critical challenges, from staffing shortages to supply chain disruptions. The hospitality and night time economy is a critical component of our cultural and economic landscape, and we urge the government to consider targeted support measures in the November budget, to ensure the survival and recovery of these businesses.”

Ed Bignold, managing director at Alvarez & Marsal’s corporate transformation services, added: “With high season summer trading coming to a close for most markets and businesses, and in the context of a still relatively subdued conference and event market– which otherwise would supplement demand during the autumn period – the challenge of high operational expenses may still be felt more severely in the coming months than in any other period for several years. This will be a new and more acute test of the continued viability of many hotels and restaurants in the sector.”