China inflation eases to five-year low

Dec 10, 2014, 3:29 AM EST
Chinese tourists stand along the promenade on the Bund overlooking the Huangpu River against the skyline of the Pudong district in Shanghai on December 10, 2014.
AFP/Getty Images

Inflation in China eased to a five-year low in November, suggesting continued weakness in the Asian economic giant. The BBC reports:

The inflation rate fell to 1.4% in November from 1.6% in October, which is the lowest since November 2009.

The reading was also below market expectations of a 1.6% rise. Producer prices, which have been entrenched in deflation, also fell more than forecast, down 2.7% from a year ago - marking a 33rd consecutive monthly decline.

Economists had predicted a fall of 2.4% after drop of 2.2% in the previous month as a cooling property market led to slowing demand for industrial goods. The figures are the latest in a string of government data that showed a deeper-than-expected slowdown in the Chinese economy.

Dariusz Kowalczyk, an economist at Credit Agricole, said the data partly reflected low commodity and food prices but also confirmed softness in domestic demand. "It will likely convince policymakers to ease their policy stance further and we continue to expect a RRR (bank reserve requirement ratio) cut in the near term, most likely this month," he told Reuters.

Last month, the country's central bank unexpectedly cut interest rates for the first time in more than two years to spur activity. In reaction to the data, Chinese shares continued their downward trend after the Shanghai Composite fell more than 5% on Tuesday.

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