China's inflation eases, giving room for stimulus

Associated Press
A clerk counts Chinese banknotes at a bank in Huaibei, in central China's Anhui province, Friday June 8, 2012. China cut state-set gasoline and diesel prices for the second time in a month on Friday amid mounting government efforts to reverse a sharp slowdown in the world's second-largest economy. The reduction in fuel prices followed an interest rate cut on Thursday, which was the first in almost four years, and a small but significant step toward letting the market set rates paid on bank deposits. (AP Photo)  CHINA OUT
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A clerk counts Chinese banknotes at a bank in Huaibei, in central China's Anhui province, Friday June 8, 2012. China cut state-set gasoline and diesel prices for the second time in a month on Friday amid mounting government efforts to reverse a sharp slowdown in the world's second-largest economy. The reduction in fuel prices followed an interest rate cut on Thursday, which was the first in almost four years, and a small but significant step toward letting the market set rates paid on bank deposits. (AP Photo) CHINA OUT

BEIJING (AP) — China's inflation eased further in October as increases in food prices slowed, giving Beijing room to launch new stimulus measures if needed to speed a recovery from a painful economic slump.

Consumer prices rose 1.7 percent, down from the previous month's 1.9 percent, the government reported Friday. Food prices rose 1.8 percent, down from September's 2.5 percent.

Lower inflation gives Beijing more room to cut interest rates or promote new stimulus measures to speed an economic recovery that appears to be taking shape. Forecasters say growth that has declined steadily over the past year should rebound this quarter or early in 2013 but any recovery is likely to be gradual and weak.

Chinese economic growth fell to a three and a half year low of 7.4 percent in the quarter ending in September but investment, retail sales and other indicators improved from the previous quarter. The government said last month it saw "steady economic growth," suggesting there was no need for further major stimulus.

Beijing launched a mini-stimulus, cutting interest rates twice in June and July and stepping up investment by state companies and spending on building airports and other public works. But authorities avoided bigger measures after their huge spending in response to the 2008 global crisis fueled inflation and a wasteful building boom.

Communist leaders spent two years trying to crush inflation and prevent economic overheating but shifted emphasis late last year to shoring up slowing growth after global demand for Chinese exports plunged.

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Online:

National Bureau of Statistics (in Chinese): www.stats.gov.cn

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