Customers purchase radishes in a market in Liuzhou City, southwest China`s Guangxi Zhuang Autonomous Region, Nov. 9, 2011. China`s consumer price index (CPI), the main gauge of inflation, rose 5.5 percent year-on-year in October, weakening from September`s 6.1 percent, the National Bureau of Statistics (NBS) said on Wednesday. (Xinhua/Huang Xiaobang)
BEIJING, Nov. 9 (Xinhua) -- China`s consumer price index (CPI), a main gauge of inflation, rose 5.5 percent year-on-year in October, weakening from September`s growth of 6.1 percent, the National Bureau of Statistics (NBS) said on Wednesday.
October`s CPI growth marked the slowest surge since May this year, softening from 6.1 percent in September, 6.2 percent in August, 6.5 percent in July and 6.4 percent in June.
"The October CPI data showed that the government`s price control efforts have started to pay off," said Zhang Liqun, a macroeconomic researcher with the Development Research Center of the State Council, or China`s Cabinet.
Zhang said the slowing price increases will create favorable conditions for the country to fine-tune its monetary tightening policies, although inflationary pressure will remain due to a large outstanding broad money supply (M2).
By the end of September, the gross M2 still stood at 78.74 trillion yuan (12.4 trillion U.S. dollars), about 1.8 times larger than China`s gross domestic product (GDP). In 2008, it was only 1.54 times larger than the GDP, Zhang said.
"The size of the money supply remains huge and policymakers should be careful about (loosening) the monetary policy and not ignore its potential for boosting prices," he said. "It is a critical moment for the country`s macroeconomic control policies and we can`t be too careless in loosening the policies."
Prior to the NBS announcement, many economists expected the October CPI to rise by 5.4 percent year-on-year.
On a monthly basis, the cost of living in October was still 0.1 percent higher than September, although it was still lower than the 0.5 percent month-on-month growth in September, according to the NBS.
Food prices, which account for nearly one-third of the basket of goods used to calculate the CPI, moved up 11.9 percent in October from a year earlier but dipped 0.2 percent month-on-month, according to NBS data.
China`s CPI hit a 37-month high of 6.5 percent in July this year, far above the government`s full-year target of 4 percent.
China`s producer price index (PPI), a major measure of inflation at the wholesale level, rose 5 percent in October year-on-year, the slowest growth in a year.