China September CPI, factory gate prices reflect slower growth

The latest readings on inflation in China at both the consumer and factory gate level were pointing to slower economic growth ahead, economists said.

According to China's National Bureau of Statistics, the rate of advance in consumer prices in Asia' largest economy picked-up from a year-on-year pace of 2.3% for August to 2.5% in September - its highest level since May 2014

That was in-line with market forecasts.

Yet Julian Evans-Pritchard at Capital Economics attributed the faster pace of price gains entirely to the impact of African swine flu and poor weather which sparked a 3.7% month-on-month ris in the price of pork and a 10% jump in vegetable prices.

Non-food and core inflation on the other hand both slowed, with the latter slipping to 1.7%.

Producer price gains also fell back, cooling from a clip of 4.1% in August to 3.6% for last month, which was also expected.

In comparison to the prior month, factory gate inflation did accelerate from 0.4% to 0.6%, but only because of the recent increase in crude oil prices, which had already begun to reverse.

"The big picture is that while oil prices have lifted headline PPI recently, upward pressure on the price of the intermediate manufactured goods that make up the bulk of China's factory output is easing alongside weaker economic activity," Evans-Pritchard said.

"Indeed, central bank officials have generally shrugged off inflation concerns recently and so we doubt these will prevent a further loosening of monetary policy in the coming months in a bid to shore up economic growth."