-HSBC
China's consumer inflation fell in September to levels last seen in January 2010, adding to evidence that the world's second biggest economy is losing steam but providing policy makers with a possibility to embark on more stimulus if needed. Consumer prices gained 1.6% from the same period last year amid lower commodity prices and declining food inflation. The reading also came against analysts' expectations of a 1.7% annual rise, and was down from 2% in August. Data also indicated further downward pressure from the cooling housing market, which analysts believe is the biggest threat China's economy is facing. The CPI rose 0.5% in September from the preceding month, beating economists' expectations for a 0.4% gain.
Facing increasing risks to growth and rising threat of deflation, Beijing is widely expected to continue steadily deploying incentives in coming months, though most economists believe it will refrain from more aggressive steps such as an interest rate cut unless economic conditions sharply deteriorate. With inflation well below the official annual target of 3.5%, Chinese policymakers have ample room to unveil more stimulus, on top of steps earlier in the year. The Australian Dollar, China-dependent currency, briefly fell against the U.S. Dollar following the data release, before recovering to trade at $0.8701.
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