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Wednesday, October 15, 2014, 10:49

China September inflation at 4-year low

By Agencies

China September inflation at 4-year low

BEIJING - Growth in China's consumer inflation slowed than market expectation to 1.6 percent in September, the lowest since January 2010, data showed on Wednesday.

This is compared with an increase of 2 percent registered in August, the National Bureau of Statistics said in a statement on its website.

On a monthly basis, the consumer price index (CPI) rose 0.5 percent last month, faster than August's 0.2-percent increase, versus a 0.4 percent gain expected by economists.

With inflation well below the official annual target of 3.5 percent, Chinese policymakers will have ample scope to announce more stimulus measures, though analysts appear divided over whether Beijing will continue to roll out more modest measures or if it now needs to take more aggressive action such as cutting interest rates to fend off the risks of deflation.

The producer price index fell 1.8 percent for the 31st consecutive month, dragged by lower oil and steel prices as weakening demand curbed companies' pricing power and put increasing strains on their balance sheets and ability to pay back debts.

The market had expected a 1.6 percent fall in producer prices after a drop of 1.2 percent in August.

Trade data on Monday showed China's export performance in September beat forecasts.

Premier Li Keqiang said earlier this month that China will avoid a hard landing despite worries over the cooling real estate market.

Li also said he was confident the economy would continue to grow at a "medium to high tempo", forecasting growth of about 7.5 percent this year, which appears sharply at odds with the low inflation figure.

Third quarter gross domestic product along with September retail sales, industrial output and investment data will be released on Oct 21.

China September inflation at 4-year low

China's producer price index (PPI), which measures inflation at wholesale level, dropped 1.8 percent year on year in September, the National Bureau of Statistics (NBS) said on Wednesday.

The PPI declined for the 31st straight month and at a faster pace than the previous month, indicating shrinking demand and rising production overcapacity amid slowing economic growth.

Yu Qiumei, senior statistician of the NBS, attributed the decline in September to price dives in crude oil, refined oil and steel.

Factory prices of production materials went down 2.4 percent in September, contributing 1.8 percentage points to the PPI drop, while factory prices for consumer goods gained 0.1 percent.

In the first nine months, the country's PPI dropped 1.6 percent year on year, the data showed.

In the previous months, the PPI dropped 1.2 percent year on year in August, 0.9 percent year on year in July, 1.1 percent in June, 1.4 percent in May, 2 percent in April and 2.3 percent in March. 

 "The PPI drop rate continues to expand, indicating the task of digesting production overcapacity is huge," said Wang Jun, a researcher at the China Center for International Economic Exchange, adding that the downward pressure for China's economy has not been relieved and the foundation for economic recovery is fragile.

The data came along with the growth in China's consumer inflation, which slowed more sharply than expected to 1.6 percent in September.

They followed Monday's data that China's exports saw the fastest growth in 19 months, up 15.3 percent from a year ago to 213.7 billion U.S. dollars in September.

The NBS is scheduled to release quarterly GDP data next week.


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