BEIJING (REUTERS, BLOOMBERG) - Consumer inflation in China eased more than expected in September while producer prices fell for the 43rd straight month, adding to concerns over growing deflationary pressures in the world's second-largest economy.
The consumer price index (CPI) rose 1.6 per cent in September from a year earlier, the National Bureau of Statistics (NBS) said on Wednesday (Oct 14), lower than expectations of 1.8 per cent and down from August's 2.0 per cent.
The producer price index (PPI) fell 5.9 per cent from a year ago, in line with the expectations and the same rate of decline as in August, which was the biggest drop since the depths of the global financial crisis in 2009.
With consumer inflation well below the government target of 3 per cent all year, the central bank has further capacity to spur lending even after cutting interest rates five times since November.
A property downturn has capped prices for households, while industrial overcapacity, a commodities downturn and sluggish global demand have weighed on prices both into and out of China's factories.
"The outlook for the economy is still not good," Liu Yaxin, Shenzhen-based economy analyst at China Merchant Securities Co., wrote in a report ahead of the data. "Weak external and domestic demand has a more severe impact on domestic manufacturers. The high frequency data has not shown any signs of stabilisation."
Weak demand has depressed prices around the world. Britain's inflation rate turned negative for only the second time since 1960 last month, UK officials said Tuesday, and US price gains have not exceeded the Federal Reserve's 2 per cent target for three years.