Rising food prices drive inflation rate up to 3.2%

Rising food prices have bumped the annual rate up by 3.2%, following the largest monthly increase on record.

The Consumer Prices Index (CPI) recorded a 1.2 percentage point increase from 2% in July to 3.2% in August 2021.

Spending in the hospitality, recreation and culture sectors, alongside the purchase of food and non-alcohol beverages, was responsible for driving up the inflation rate.

However, the Office for National Statistics, which publishes the figures, said that dramatic increase is likely to be a temporary change, partly because of the discounted restaurant prices in August 2020 during the government’s Eat Out to Help Out scheme and, to a lesser extent, the reduction in VAT on restaurant food prices.

The current temporary reduced VAT rate of 5% will increase to 12.5% until 31 March 2022.

The latest figures, published this morning, are ahead of the Bank of England's target inflation rate of 2%.