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Published on : Nov 10, 2015

Inflation waned in the China consumer goods market in October while the deflation for factory-gate was stretched for negative readings that reached a new record. This prompted policy makers as they might require accelerating once more to release the pressure off Chinese deflation.

There was a 1.3% increase in consumer inflation through October from the same month in last year, as stated by the National Bureau of Statistics. There was a gap of 1.5% in the median estimate in a recent survey and a slip of 1.6% in September. There was also a recorded 5.9% drop in producer price index, which is one a decline for the 44th month in a row.

The risks caused by deflation still linger with the trade weakening. This allows for extra stimulus while the inflation is maintained at nearly half of the government’s assigned rate. There was another interest cut by the People’s Bank of China for the sixth time this year. The bank is not trying to recover economic stability by not letting debt reemerge.

Liu Li-Gang from Australia and New Zealand Banking Group Ltd., their chief Greater Chine economist, said there is now an enhanced risk of deflation, and it needs the PBOC to create increasingly aggressive methods to ease policies.

There was a four day rally that was stopped by Chinese stocks, after a 0.2% drop by the Shanghai Composite Index. The yield on government debt dropped 3.23% or by two basis points, due October 2025, as noted in the prices by the National Interbank Funding Centre.