Low inflation boosts stimulus hopes in China
Further injections by the central bank into the financial system are likely as concerns over deflation increase amid flat growth in consumer prices
The mainland's annual consumer inflation remained near a five-year low in October at 1.6 per cent, further evidence that the economy is cooling and reinforcing expectations that authorities will roll out more measures to support growth.
Analysts polled had expected inflation to be 1.6 per cent in October, the same as September, which was the weakest reading since January 2010.
On a monthly basis, consumer inflation was flat in October, the National Bureau of Statistics said yesterday. That compared with 0.1 per cent expected by economists.
"The risk of deflation has risen as the economy is expected to slow further in the next few quarters," ANZ economists said in a research note.
"This is a significant risk … which requires China's policymakers to monitor the situation closely and take action swiftly."
They said the central bank might inject money into the financial system more frequently to keep it working smoothly.
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 as an interest rate cut unless conditions sharply deteriorate.