China’s cooling inflation prompts calls for monetary easing

The National Bureau of Statistic said China’s consumer price index, or CPI, the main gauge of inflation, grew 1.3 percent year on year in October.

The reading, much lower than the market forecast of around 1.5 percent, slowed from the 1.6-percent gain in September and 2 percent in August.

Sheng Hai from Industrial Securities attributed the slowdown to falling pork and vegetable prices due to ample supplies. Food prices, which account for nearly one-third of the weighting in China’s CPI, declined 1 percent from a month earlier.

SOUNDBITE (CHINESE) SHENG HAI, Industrial Securities
October’s inflation slowed mainly because of the decline of food prices, which is the result of the good harvest this year, as well as declines in the prices of bulk commodities including petroleum and steel.

Analysts say the figures highlighted deflation pressure in China, while some project further monetary easing, including rates cut could be on the way.

The central bank has cut the benchmark interest rates and reserve requirement ratio five times this year already.

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