China Inflation Data Points to Weaker Economic Growth

China’s consumer inflation slowed more than expected in September to a near five-year low, adding to concerns that global growth is cooling fast unless governments take bolder measures to shore up their economies.  While much of the decline was due to falling prices for food, fuel and other commodities, which are benefiting consumers globally, the data also pointed to broad weakness in the world’s second-largest economy.

Facing mounting risks to growth and rising risks of deflation, Beijing is widely expected to continue rolling out a steady stream of stimulus measures in coming months, though most economists believe it will hold off on more aggressive action such an interest rate cut unless conditions sharply deteriorate.  “Policymakers in Beijing should begin to be concerned that global disinflationary pressures are spreading to China,” said Dariusz Kowalczyk, senior economist at Credit Agricole CIB in Hong Kong.

“The low inflation readings will open the door to further targeted monetary and fiscal easing. There is also less need for a strong currency to offset imported inflation.”  The consumer price index (CPI) rose 1.6 percent in September from a year earlier, the National Bureau of Statistics said on Wednesday, missing market expectations for a 1.7 percent rise and down from 2 percent in August.

Reuters

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