BEIJING: China's annual consumer inflation crept up to a seven-month high of 3.1 per cent last month from 2.6 per cent in August, official data showed yesterday, limiting the scope for the central bank to manoeuvre to support the economy.
The inflation rate was higher than a median forecast of 2.9 per cent in a poll, but was still below the official target of 3.5 per cent target this year.
Month-on-month, consumer prices rose 0.8 per cent, the National Bureau of Statistics said, bigger than a rise of 0.5 per cent expected by economists.
"We expect consumer price index (CPI) inflation to rise further in the fourth quarter and see rising risks that it may be above 3.5 per cent for some months next year," said Zhiwei Zhang, China economist at Nomura in Hong Kong. "The rise of CPI inflation leaves little room for policy easing as benchmark deposit rate is only three per cent."
At the same time, analysts see little risk of a near-term tightening given inflation was below the full-year target and because the world's second-largest economy faces a tough global environment.
China's exports dropped 0.3 per cent in September from a year earlier, against expectations of a six per cent rise, data showed.
Meanwhile, India's headline inflation, too, unexpectedly hit a seven-month high last month, mainly driven by higher food prices, increasing the odds for yet another interest rate hike by the central bank at its policy review later this month.
The wholesale price index (WPI), India's main inflation measure, rose an annual 6.46 per cent last month, the fastest pace since February this year.
The reading compares with a six per cent rise estimated by analysts in a poll.
Wholesale prices had risen 6.1 per cent in August.
The rise was mainly driven by higher prices of onions and vegetables. Onion prices were up an annual 322.94 per cent in September, while prices of vegetables rose 89.37 per cent year-on-year.
Worries over high inflation led new Reserve Bank of India chief Raghuram Rajan to surprise markets in his policy review last month with an interest rate hike.
Economists are split over whether Raghuram will hike rates again at the next review on October 29.
However, yesterday's WPI data has increased the odds for more tightening at that meeting. Reuters