BEIJING (AFP) – Chinese inflation was unchanged at a near five-year low of 1.6 per cent in October, the government said Monday, with analysts warning the world’s number two economy is facing deflationary risks.
The consumer price index (CPI) figure released by the National Bureau of Statistics is the weakest since January 2010 and matched the median prediction of 1.6 per cent in a Wall Street Journal poll.
In the first 10 months of the year, the CPI came in at 2.1 per cent year on year, well short of the 3.5 per cent annual target set by the government in March.
The producer price index (PPI) – a measure of costs for goods at the factory gate and a leading indicator of the trend for CPI – fell 2.2 per cent year on year and was the weakest since March’s fall of 2.3 per cent, the bureau said.
The figures add to worries about deflation in the Asian giant and ANZ analysts Liu Ligang and Zhou Hao said in a research note that risks will likely increase with the economy expected to slow further in the coming quarters.
“This is a significant risk facing China’s economy, which requires China’s policymakers to monitor the situation closely and take actions swiftly,” they said.
The data will give the central People’s Bank of China some room to fine-tune monetary policy to kickstart economic growth, which stood at 7.7 per cent last year, maintaining its slowest pace in more than a decade.
Adding to economic woes were figures released Saturday that showed growth in exports and imports slowing further last month.
Exports expanded 11.6 per cent year-on-year, compared with 15.3 per cent in September, while imports rose 4.6 per cent, down from 7.0 per cent.
Officials are targeting economic growth of “about 7.5 per cent” this year, the same as last year’s objective.
Moderate inflation can be a boon to consumption as it encourages consumers to buy before prices go up, while falling prices encourage shoppers to delay purchases and companies to put off investment, both of which can hurt growth.