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China says inflation slows to 1.9% in September

BEIJING (AFP)

China's inflation rate slowed in September, government data showed on Monday, satisfying an official desire to control price gains, but highlighting overall weakness in the world's second-largest economy.

The country's consumer price index rose 1.9 percent year-on-year, the National Bureau of Statistics (NBS) said. Inflation had stood at 2.0 percent in August.

The result came in as expected -- a survey of 12 economists by Dow Jones Newswires resulted in a median forecast of 1.9 percent.

In a worrisome sign, however, producer prices -- which measure the costs of goods as they leave factories, and are seen as a leading indicator of price trends -- declined 3.6 percent year-on-year.

It marked the seventh straight monthly contraction. Producer prices fell 3.5 percent in August.

China's economy grew 7.6 percent in the second quarter through the end of June for its weakest performance in three years and the sixth straight quarter of slowing expansion.

This file photo shows a customer choosing a chicken at a market in Huaibei, in eastern China's Anhui province. China's inflation rate slowed in September, official data showed on Monday, potentially giving the government further room to stimulate the economy to boost slumping growth.

Authorities have taken steps to boost growth by cutting interest rates twice in quick succession this year and reducing the amount of funds banks must keep in reserve to boost lending three times since December.

The government said Saturday that China's exports rose 9.9 percent in September year-on-year to a record monthly high of $186.4 billion, but analysts said that pace was unlikely to continue amid global trade weakness.

Overall Chinese data for the third quarter has been generally disappointing, leading to expectations that gross domestic product growth may have slowed for a seventh straight quarter.

China is scheduled to announce third-quarter economic growth figures on Thursday.

September's inflation data came after the deputy chief of China's central bank said Sunday that his top priority is to control inflation.

"(To) control inflation is our number one job. As a central banker, we have to control inflation," Yi Gang, deputy governor of the People's Bank of China, told delegates to the annual meetings of the International Monetary Fund and the World Bank in Tokyo.

The price data, however, highlight persistent weakness in China's economy, said Alistair Thornton, senior China economist at IHS Global Insight.

"Inflation data continues to point to slack demand, with industrial prices contracting at a rapid pace," Thornton said a report after the data were released.

"There's no argument about it, the economy is yet to stabilise."

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