UK Sept CPI rises to 0.5%; borrowing soars to record £208bn
By Frank Prenesti
Date: Wednesday 21 Oct 2020
(Sharecast News) - The UK government borrowed £36.1bn in September taking borrowing in the first six months of the financial year to a record £208.5bn, the Office for National Statistics said on Wednesday.
It also reported that annual consumer price inflation rose to 0.5% in September from 0.2% in August, when it had been cut by the government's "Eat out to Help Out" subsidised meal scheme to help the restaurant sector.
Inflation accelerated as the scheme wound down and a surge in demand for second-hand cars pushed up prices.
The government borrowed £174.5bn more in the half year than in the same period last year - the highest in any April to September period since records began in 1993. Each of the six months from April to September 2020 were also records, the ONS said.
Howard Archer of EY Item Club said August's rate of 0.2% "almost certainly marked the low point for inflation and this view is reinforced by September's rise" and expected CPI to hover around 0.5% through the rest of 2020 and early-2021 before starting to trend up gradually.
"While the economy clearly saw a substantial bounce back in the third quarter after its record second quarter contraction of 19.8% quarter-on-quarter, growth is likely to be limited in the fourth quarter at the least amid increased restrictions on activity due to rising Covid-19 cases, a likely significant rise in unemployment and waning pent-up demand," he added.
"This is likely to fuel consumer caution in their spending, while the near-term fundamentals for consumer spending look challenging. Many people have already lost their jobs, despite the supportive government measures, and others will be worried that they may lose their jobs with the furlough scheme ending in October."
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