China’s consumer price index (CPI) moderated to 1.3% year-on-year in October, down from a 1.3% increase in September.
On a month-on-month basis, CPI fell 0.3%, compared with a 0.1% increase in September.
In particular, food inflation moderated to 1.9% in October, down from an increase of 2.7% in September.
Producer price index (PPI) declined 5.9% year-on-year, unchanged from September’s drop, reflecting weak domestic demand and the drop in global commodity prices.
"Today’s data reinforce our view that China’s deflationary pressure has intensified. As the pork price cycle appears to have peaked and price gains are petering out, the CPI is unlikely to see a substantial pick up in the near future," says a research report by ANZ.
"The PPI remained in negative territories for almost four years, leaving little room for firms to increase their factory gate prices…Today’s CPI opens the door wider for the People’s Bank of China to ease monetary policy further through reducing reserve requirement ratio (RRR) and benchmark interest rates," according to the report.