Inflation fell as expected in September

However, food inflation in the month under review edged up by 0.69 percent from a decline of 1.13 percent recorded in August and 3.68 percent in the corresponding month of a year ago.

‘Inflation could stay negative for another month or two, but it is still likely to rebound at the turn of the year when the previous bigger falls in energy prices drop out of the annual comparison.

The PPI and CPI are interrelated, as the PPI reflects prices in production, while CPI reflects prices at the point of consumption. “As consumer prices moderate, the PBOC will continue to expand credit”.

A raft of key quarterly economic indicators will be released on Monday.

Lower interest rates tend to boost inflation, although economists have recently warned that in the current environment cheaper borrowing costs may do little to stoke spending by businesses or consumers.

The recent run of subdued data has raised expectations for further monetary easing and fiscal support.

Decline in the prices of raw materials, due to slower worldwide commodity prices, has helped the industrial sector to perform better, according to analysts.

The weak PPI highlights severe overcapacity and low domestic investment, said Zhao Yang, chief China economist of Japanese financial institution Nomura.

“The main upward contribution came from housing-related prices”, prices senior manager Chris Pike said in a statement. The central bank has signalled that it would wait for sometime before cutting interest rates.

The Consumer Price Index (CPI) rate of inflation fell from zero in August to minus 0.1 per cent. The data from NBS showed that, the non-food CPI was also low for September, with a yearly growth rate of 1.0 percent.

The sharp rise in the inflation numbers were due to rise in food and beverages, which nearly doubled from a month earlier to 4.29 percent in September.

The note said the recent rebound in the New Zealand dollar, the lack of underlying non-tradables inflation and weak pricing intentions indicated weak overall inflation pressures.

It said despite recent stock market falls sparked by fears over the slowdown in China’s economy, there had been “few signs of a marked weakening in Chinese activity” in recent data.