China’s factory-gate deflation eases in Oct. as consumer prices rise

China’s producer price deflation eased in October and consumer prices returned to positive territory, data showed on Sunday, as the government steps up efforts to curb overcapacity and cutthroat competition among firms.

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Despite the improvement in headline numbers, analysts warn that deflationary pressures on the world’s second-largest economy are not yet over, and the government may have to roll out additional policy measures to spur demand.

“Demand remains weak, but a rebound in CPI (consumer price index) indicates that supply-side policies are having an effect, and the supply-demand balance in many industries is improving,” said Xu Tianchen, senior economist at the Economist Intelligence Unit.

“The future trend of inflation will depend on how much demand-side policies are strengthened.”