Chinese inflation falls

Inflation in China fell sharply in October. The latest official figures show the annual inflation rate receded to 5.5 percent from September’s 6.1 percent.

That was the biggest drop in the annual rate from one month to the next since February 2009. In July it had hit a three-year peak of 6.5 percent.

At the same time industrial output grew at its weakest annual pace in a year.

That has analysts speculating that the Beijing government will do more to support economic growth though probably will not cut interest rates.

Consumer spending and investment in assets such as roads and other infrastructure remained resilient.

Premier Wen Jiabao said prices had fallen further since October, adding to the view that the State Council will start to favour more pro-growth policies, although inflation is still too high to expect a quick cut in interest rates from the People’s Bank of China.

A senior official from the country’s top economic planning agency signalled caution ahead, saying inflation was likely to stay high in coming months.

China’s leaders have begun talking in recent weeks about “fine tuning” macroeconomic policy to maintain economic growth, which slowed in the third quarter to 9.1 percent, its weakest in more than two years.

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