China’s inflation sinks to a 5-year low

Sliding global inflation is spreading to China, as the cost of living in the world’s second largest economy hit a five-year low in September, figures showed yesterday.

China’s consumer prices index slowed to 1.6 per cent on the month as food and oil prices fell amid a backdrop of easing growth, which is likely to prompt more stimulus measures from Beijing. Inflation is less than half the official target of 3.5 per cent.

The figures come after UK inflation eased to 1.2 per cent, also a five-year low, while the eurozone is close to outright deflation territory with inflation of just 0.3 per cent.

“Policymakers in Beijing should begin to be concerned that global disinflationary pressures are spreading to China,” said Dariusz Kowalczyk, senior economist at Crédit Agricole.

“The low inflation readings will open the door to further targeted monetary and fiscal easing,” he added.

Chinese data also showed further downward pressure on the economy from the cooling housing market.