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China CPI Eases to 4% in October

China's consumer inflation rose at a slower annual rate of 4 percent in October, giving the government more room to ease macroeconomic controls to stimulate the economy.

Rises in consumer price index (CPI), the main gauge of inflation, slowed for the six straight months. The figure, compared with 4.6 percent in September, 4.9 percent in August, 6.3 percent in July, 7.1 percent in June, and a nearly 12-year-high of 8.7 percent in February, was broadly in line with most forecasts.

The CPI was 6.7 percent in the year to October, down from 7.0 percent in the first three quarters, the National Bureau of Statistics (NBS) announced on Tuesday.

The price of food, the main driver behind inflation since last year, climbed 8.5 percent last month from a year earlier, down from 9.7 percent in September. Prices of non-food items rose 1.6 percent.

"The easing in inflation gives the government further room to adjust policies to spur the economy while without worrying about inflation," Peng Xingyun, a researcher at the Institute of Finance and Banking under the Chinese Academy of Social Science (CASS).

There was little chance inflation could rebound in the short term and it could only rebound as early as in the second half of next year, Peng said, adding "Governments worldwide now focus on tackling the financial crisis and spurring economic growth."

Producer inflation also eased to 6.6 percent in October because of declines in commodities prices and the lag effect of earlier tightening measures, the NBS said on Monday.

China's economy slowed sharply in the third quarter because of slowing export and investment growth. The gross domestic product grew at an annualized rate of 9 percent in the third quarter, down from 10.1 percent in the second quarter and 10.6 percent in the first quarter.

Amid growing concerns over a sharp economic slowdown, the State Council, or Cabinet, on Sunday unveiled a massive stimulus package worth 4 trillion yuan (US$570 billion) and said it would adopt "active" fiscal and "moderately loose" monetary policies.

In addition, the People's Bank of China, or central bank, has cut borrowing costs three times over the past two months.

(Xinhua News Agency November 11, 2008)

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