Macro Data - China

China 
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% on-year in September - the lowest since January 2010, and was down from August’s 2%, according to the National Bureau of Statistics (NBS). The CPI rose by a marginal 0.5% in September from the previous month, suggesting rising risks of deflation in China due to weak domestic demand.

On the other hand, China's producer price index (PPI), which measures inflation at wholesale level, dropped 1.8% on-year, following a 1.2% decline in August. The reading was the 31st consecutive year-on-year monthly decline logged and at a faster pace than the previous month, indicating shrinking demand and rising production overcapacity amid slowing economic growth. Yu Qiumei, senior statistician of the NBS, attributed the decline in September to price dives in crude oil, refined oil and steel.

Factory prices of production materials fell 2.4% in September, while factory prices for consumer goods gained 0.1%. In the first nine months, the country's PPI dropped 1.6% on-year. While much of the decline was due to falling prices for food, fuel and other commodities, the readings also pointed to broad weakness in the world’s second-largest economy as global disinflationary pressures are spreading to China.

In view of the mounting risks to growth and rising risks of deflation, while inflation remained well below the official annual target of 3.5%, Beijing is widely expected to continue rolling out a stream of stimulus measures in coming months to shore up the economy, although officials has been refrained from taking more aggressive action such an interest rate cut.