Rising deflation risks in China after soft CPI data

In September, it rose 0.1 per cent from the preceding month.

China’s consumer price index (CPI), the main gauge of inflation, grew 1.3 percent year-on-year in October, the National Bureau of Statistics (NBS) said on Tuesday.

Moderate inflation can be a boon to consumption as it pushes buyers to act before prices go up, while falling prices encourage shoppers to delay purchases and companies to put off investment, both of which can hurt growth.

The Australian dollar largely shrugged off downbeat Chinese price data that showed intensifying deflationary pressure.

Authorities earlier this month pledged to accelerate reforms following a key Communist Party meeting, but analysts warn that more needs to be done to avoid a hard landing for the economy.

The CPI also declined 0.3% in October from September. China is a major trading partner for Australia.

The troubles have sent waves of concern through stock markets around the world.

Consumer prices are to rise 2 percent next year, according to the median of economist estimates in a Bloomberg survey.

China’s 13th five-year plan has set a target of maintaining medium-high growth for the 2016-2020 period. Bank lending is expected to hold steady at 2.6 percent.

To combat the economic slowdown, the central bank has cut benchmark interest rates six times in the last 11 months and lowered banks’ reserve requirement ratio five times in the last nine months.

A spokesman for the Chinese central bank opened the door for more easing after its most recent rate cut in October, saying the “overall low level of domestic prices” is creating “a definite degree of room for lowering interest rates”.

Tuesday’s weak inflation print continues a well-established trend of falling producer prices and tepid consumer price rises, in part a result of sharply lower commodity prices in 2015 but also reflecting slowing demand growth for many goods.

In Mumbai shares in India’s largest carrier IndiGo soared nearly 18 percent on their debut, with confident traders betting on the country’s growing appetite for air travel.