China’s consumer price inflation eased to the lowest since October 2009 as pork prices fell for the first time in 19 months, data from the National Bureau of Statistics showed Tuesday.
Consumer price inflation slowed to an 11-month low of 0.5 percent in October from 1.7 percent in September. This was also below economists’ forecast of 0.8 percent.
Pork prices decreased 2.8 percent on year in October after climbing 25.5 percent a month ago. This was the first fall in 19 months.
Excluding food and energy, core inflation held steady at 0.5 percent in October.
Month-on-month, consumer prices dropped unexpectedly by 0.3 percent, in contrast to a 0.2 percent rise in September. Prices were expected to fall again by 0.2 percent.
Another report from the NBS showed that producer prices grew 2.1 percent annually, the same rate of growth as logged in September. Economists had forecast a 2 percent fall in October.
On a monthly basis, producer prices remained unchanged after a 0.1 percent rise in the previous month.
Consumer price inflation looks set to drop back further in the near-term as pork supply continues to recover from last year’s African swine fever outbreak, Julian Evans-Pritchard and Sheana Yue at Capital Economics, said.
However, the economists noted that demand-side price pressures are likely to strengthen in the coming months given the rebound in consumption and ongoing infrastructure-led stimulus.
Economists said policymakers are likely to look through the volatility in food prices and focus on the recovery in underlying inflation. As such, low headline inflation is likely to prevent the central bank from raising interest rates next year.
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