Mainland China’s September inflation slows to near five-year low

By Fran Wang ,AFP

BEIJING — Inflation in China fell to 1.6 percent in September, the government said Wednesday, below analysts’ forecasts and the lowest in the world’s second-largest economy for almost five years. The consumer price index (CPI) figures released by the National Bureau of Statistics represented a slowdown in year-on-year inflation from 2.0 percent in August.

It was the lowest since January 2010. Analysts polled by Dow Jones Newswires had predicted 1.7 percent. The figures fall well short of the 3.5 percent annual target set by the government in March, and signal that deflationary pressures are rising. 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 weigh on growth. The latest figures give authorities more room to take steps to stimulate the economy, as statistics suggest that Chinese expansion �X which stood at 7.7 percent last year, maintaining its slowest pace in more than a decade �X is weakening. ��China’s soft inflation profile heightens the risk of deflation, thus requiring further monetary policy easing,�� ANZ analysts said in a research note. They attributed the sluggish price increases to the country’s ongoing fight against corruption and a government austerity drive. ��The anti-graft campaign could have significantly eased upward pressures on prices. Notably … the price of tobacco and liquors has dropped to negative territory since September 2013,�� they said, referring to arguably the two most popular gifts in the country.