China consumer price index (CPI) increased 1.6% year-on-year in October, keeping steady from the previous month, according to data released by China’s National Bureau of Statistics.
Producer price index (PPI) declined 2.2% year-on-year in October, compared with September’s 1.8% drop. The gauge has remained in negative territories for 32 consecutive months.
China has entered into a dis-inflation process with rising deflation risk, with the ongoing anti-graft campaign cooling down the government spending, the property softness, and falling commodity prices due to strong RMB, according to a report by ANZ.
"We think the probability of a universal rate cut has been rising given the falling inflation and need to stabilize growth and bolster stock markets, especially when Shanghai-Hong Kong Stock Connect starts on 17 November," says a report from BofA Merrill Lynch Global Research.