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China inflation slows to near five-year low | China inflation slows to near five-year low |
(35 minutes later) | |
Inflation in China eased to a near five-year low in September, adding to further evidence of a slowdown in the world's second largest economy. | |
The consumer price index (CPI) rose 1.6% in September from a year ago - the lowest since January 2010. | The consumer price index (CPI) rose 1.6% in September from a year ago - the lowest since January 2010. |
That also missed market expectations of a 1.7% yearly rise, and was down from 2% in August. | That also missed market expectations of a 1.7% yearly rise, and was down from 2% in August. |
The slowing inflation rate could be a result of good harvest weather in China, said Tim Condon at ING. | The slowing inflation rate could be a result of good harvest weather in China, said Tim Condon at ING. |
"Typically the months we need to worry about for food in China are in the middle of the year and the beginning January/February which are Lunar New Year contagion months, so we're in the soft period now for food component inflation," he said. | "Typically the months we need to worry about for food in China are in the middle of the year and the beginning January/February which are Lunar New Year contagion months, so we're in the soft period now for food component inflation," he said. |
Will Beijing step in? | Will Beijing step in? |
Economists said the recent figures give policymakers a lot of room to stimulate the economy with inflation well below Beijing's official annual target of 3.5%, but most are divided on whether authorities will step in. | Economists said the recent figures give policymakers a lot of room to stimulate the economy with inflation well below Beijing's official annual target of 3.5%, but most are divided on whether authorities will step in. |
"Everything I'm hearing from the authorities is they feel the economy is broadly in a good shape and not needing broad assistance that would come from a deposit rate cut or an RRR [reserve requirement ratio] cut," Mr Condon said. | "Everything I'm hearing from the authorities is they feel the economy is broadly in a good shape and not needing broad assistance that would come from a deposit rate cut or an RRR [reserve requirement ratio] cut," Mr Condon said. |
Trade figures on Monday did show that China's exports and imports in September were far higher than expected, giving a surplus of $31bn (£20bn). | Trade figures on Monday did show that China's exports and imports in September were far higher than expected, giving a surplus of $31bn (£20bn). |
But economist Li Huiyong at Shenyin & Wanguo Securities said the unexpected inflation figures show a weak domestic economy. | But economist Li Huiyong at Shenyin & Wanguo Securities said the unexpected inflation figures show a weak domestic economy. |
"We expect policymakers will take more measures to stabilise the economy. The possibility of an interest rate cut is increasing in the coming months." | "We expect policymakers will take more measures to stabilise the economy. The possibility of an interest rate cut is increasing in the coming months." |
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