Current inflation rate – October 2009

The latest official inflation data reveal a sharp rise in the Consumer Prices Index (CPI), up by 0.4% to 1.5% in October compared to the previous month. The increase was expected by many and prompted by fuel prices falling a lot less this year than last.

Other inflationary pressures on the CPI came from the recreation and culture sector, largely down to a rise in the price of toys, games and recording media like CDs and DVDs.

The Retail Prices Index (RPI) while remaining in deflationary territory also saw a large upturn rising from -1.4% in September to -0.8% in October 2009.

David Kern, chief economist at the British Chambers of Commerce, has previously warned that following increases in inflation like those recorded this month:

… legitimate worries over medium-term inflation risks do not become the trigger for an unduly early withdrawal of the quantitative easing programme.

Many economists feel that although inflation may rise in the short-to-medium term, the economy could still be threatened by deflationary forces, if recovery from the recession proves fragile.

[Picture credit: lauriemcnelli1004evar licenced from Flickr]