September CPI Drop in September; Concerns Regarding Deflationary Pressure Deepen

September CPI Drop in September; Concerns Regarding Deflationary Pressure DeepenIn September, China's consumer inflation was lower than what was expected, whereas the producer prices further slid for the forty third consecutive months. That added, to concerns regarding deflation in the second-largest economy of the world.

Compared to last year's September, the consumer price index (CPI) moved up 1.6 percent according to Wednesday's data from the National Bureau of Statistics. It was lesser than Augusts' 2.0 percent and the expected 1.8 percent for September. That reveals the low demand from the consumers. The data from NBS showed that, the non-food CPI was also low for September, with a yearly growth rate of 1.0 percent.

Looking at the growing pressure on Chinese companies from the continued weakness in demand and overloading, the manufacturers further trimmed the selling prices in order to get business.

Compared to last year, even the PPI or the producer price index dropped 5.9 percent which was expected. The rate also dropped in August and was the greatest drop since the global financial crisis hit in 2009.

Economists at Nomura said, "Overall, the still weak PPI highlights the severe overcapacity problem and sluggish domestic investment demand. Given the lackluster growth outlook, we continue to expect moderate fiscal stimulus from the central government and continued monetary easing."

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