Inflation remains unchanged at 1.6%

By Wang Yanlin | November 10, 2014, Monday |

Online Edition

China's Consumer Price Index, the main gauge of inflation, remained at 1.6 percent in October, unchanged from September’s five-year low and indicating subdued inflationary pressure, the National Bureau of Statistics said today.

The Producer Price Index, the factory-gate measurement of inflation, dropped 2.2 percent last month, down from a 1.8 percent decline a month earlier.

Zhou Hao, an economist at Australia & New Zealand Banking Group Ltd, said China has entered into a dis-inflation process where there is a rising risk of deflation. He said PPI inflation has been negative for 32 consecutive months while CPI inflation has dropped to its lowest level since the global financial crisis.

"There are both good and bad dis-inflation processes. The undergoing anti-graft campaign has cooled down government spending, and the economic slowdown led by property softness has weighted on many sectors, resulting in a painful and slow destocking process," Zhou said.

Zhou said the monetary policy stance will likely remain accommodative and the fiscal policy will be proactive over the foreseeable future.

But they may not invite more aggressive easing policies, Zhou said.

The country’s reform-minded leaders have refrained from acting forcefully, such as cutting interest rates. That has caused concern among some analysts that the modest policy measures might not be enough to prevent a sharper slowdown.

The central government unveiled detailed measures to support high-tech imports, resource products and consumer goods last week, its latest effort to support the economy and rebalance trade.

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Inflation remains unchanged at 1.6%

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