China's inflation growth rebounded last month due to higher food costs, but economists said deflationary risks remained.
The Consumer Price Index, the main gauge of inflation, expanded 1.5 percent from a year earlier in November, up from October's 1.3 percent increase, the National Bureau of Statistics said yesterday.
The pickup was largely the result of faster growth in food costs, which account for nearly a third in the CPI basket. They rose 2.3 percent in November, accelerating from the rise of 1.9 percent a month earlier. Prices in the non-food sector rose 1.1 percent, compared to the pace of 0.9 percent registered in October.
Yu Qiumei, a researcher at the bureau, said snowstorms in China's northern areas disrupted food supplies, leading to higher prices for meat and vegetables.
"But the effect won't last long as the weather turns better," Yu said.
The price of meat and its processed products advanced 6.2 percent year on year last month, with pork costs rising 13.9 percent. The price of fresh vegetables gained 9.4 percent.
Liu Ligang, chief China economist at Australia & New Zealand Banking Group Ltd, said that despite the rebound, China's inflation remained weak, and the country may have to deal with rising deflationary pressure in the months to come.
"Recent capital outflows indicate that another cut in the reserve requirement ratio is possible this month," Liu said. "For 2016, we expect the central bank to lower the reserve requirement ratio by 2 percent and cut the lending facility rates by at least 1 percent for the deflationary risks."
The People's Bank of China has lowered the benchmark interest rates five times this year to bolster growth, along with the five decreases in the reserve requirement ratio.
China's gross domestic product expanded 6.9 percent from a year earlier in the third quarter, the slowest pace since after the global financial crisis in 2009.
Zhu Haibin, chief economist for China at JP Morgan, said long-standing negative growth in factory gate prices was a major source of deflationary pressure.
The Producer Price Index, the measurement of inflation at the factory gate and an indication of future consumer prices, fell 5.9 percent in November, the same as in October and extending the decline for the 45th consecutive month.
"The PPI figures reflected overcapacity on the domestic front as well as lower commodity prices on the global market that created imported deflationary pressure," Zhu said.
Earlier data showed China's trade faring better than expected in November. But manufacturing activities deteriorated to their worst level in more than three years. The official Purchasing Managers' Index fell 0.2 points from October to 49.6 last month.
