Recession tracker: Inflation

A key measure of inflation, the Consumer Prices Index (CPI), increased slightly in October after hitting its lowest level for five years in September, official statistics show.

The government's preferred measure of inflation - the Consumer Prices Index (CPI) - rose to 1.5% last month, up from 1.1% in September. It was the first rise in CPI since February this year.

The Retail Price Index (RPI) also went up slightly to -0.8%, up from -1.4%.

The Bank of England aims to maintain CPI inflation at 2% to keep both prices and the broader economy stable.

The rise in CPI is largely because fuel prices have fallen less than they did this time last year, when a big fall in the price of oil contributed to a dramatic drop.

A rise in the price of second-hand cars has also contributed to the increase, as have increases in the prices of some recording equipment, games and toys.

INFLATION CALCULATOR

Check your personal inflation rate

The rise in prices has been offset by cuts in some banking charges.

The RPI, which includes mortgage interest payments and housing costs, has been partly fuelled by a rise in house prices - whereas this time last year, house prices were falling.

Both measures of inflation are still expected to fall this year, as recessions tend to bear down on inflation by making businesses compete hard on prices.

There had been fears that a steep fall might lead to deflation, where prices are lower than 12 months earlier.

Deflation is a problem, because whatever stimulus measures are put in place, consumers may be put off making any purchases if they believe that prices will be lower in the future.

It is this situation which the Bank of England has tried to forestall by slashing interest rates and pumping new money into the economy, in order to stimulate spending and other economic activity.