The fall in September inflation was mainly driven by easing food price rises, according to the NBS.
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Economists had forecast consumer inflation to rise to 4.3 percent last month, and many of them expect it to remain below RBI’s forecast of 5.8 percent by January 2016.
“The advances recorded by the “all items less farm produce” or core sub-index increased at a marginally slower pace in September relative to August, the core sub-index increased by 8.9% in September (year-on-year) from 9.0% in August”.
The Consumer Prices Index slipped into negative territory for the second time this year at -0.1%.
The CPI or retail inflation for September rose to 4.41 per cent, from 3.74 per cent in the previous month.
According to an experimental data series by the Office for National Statistics (ONS) going back to 1950 it was last negative, at minus 0.6 per cent, in March 1960.
Among the various categories under the general index, the inflation percentage in September was higher in “clothing and footwear” at 6 percent, and “fuel and light” at 5.42 percent.
The producer price index(PPI) fell 5.9 per cent from a year ago, in line with the expectations and the same rate of decline as in August, which was the biggest drop since the depths of the global financial crisis in 2009.
Consumer inflation has been at or below 2.0 per cent for all of 2015, while the drop in PPI – a leading indicator for CPI – was the 43rd consecutive monthly fall. A breakdown of the WPI into commodity and ex-commodity prices shows that while WPI commodity prices contracted -16.1% y-o-y, WPI-ex commodity prices actually rose 0.7% y-o-y in September (Please see Figure 2).
Inflation has remained between 0.8 percent and 2 percent this year. The government aims to achieve around 3% inflation this year.
China is battling a property downturn, industrial overcapacity, sluggish demand and weak exports, which dragged growth down to 7 percent for the first half of the year.
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“Given the lacklustre growth outlook, we continue to expect moderate fiscal stimulus from the central government and continued monetary easing”, said Zhao, who expects a reserve requirement ratio (RRR) cut in the fourth quarter.
