BEIJING (Reuters) - China's annual consumer inflation remained at a near five-year low in October at 1.6 per cent, further evidence that the world's second-largest economy is cooling and giving room to policymakers to stimulate growth if needed.
Analysts polled by Reuters had expected annual consumer inflation to be 1.6 per cent in October, the same as September, which was the weakest reading since January 2010.
On a monthly basis, consumer inflation was flat in October, the National Bureau of Statistics said on Monday. That compared with 0.1 per cent expected by economists.
The producer price index fell 2.2 per cent from a year ago, its 32nd consecutive decline, as sluggish demand curbed the pricing power of companies.
The market had expected a 2.0 per cent fall in producer prices after a drop of 1.8 percent in September.
Facing mounting risks to growth and rising risks of deflation, Beijing is widely expected to continue rolling out a steady stream of stimulus measures in coming months, though most economists believe it will hold off on more aggressive action such an interest rate cut unless conditions sharply deteriorate.
"We think the economy is facing rising downward pressure and deflation risks," said Li Huiyong, economist at Shenyin & Wanguo Securities in Shanghai. "The worsening PPI weighed on the manufacturing industry, providing more evidence that China's economic growth will under pressure in 2015. Policymakers should take more measures to boost the economy."
China's central bank pledged on Thursday to maintain modest policy support to help the economy in the near term but stressed that it will not flood markets with cash.
An official survey released last week showed that the services sector grew at its slowest pace in nine months in October as the cooling property sector weighed on demand, adding to signs of fragility in the economy. A similar survey found factory activity fell to a five-month low.