Indicators pointing to economic recovery

China's consumer inflation remained flat in September while the decline in factory-gate prices further narrowed, pointing to still-weak domestic demand amid signs of stabilization, thus shoring up the case for further measures to bolster the world's second-largest economy, experts said on Friday.

Despite concerns over deflationary pressure and lackluster business sentiment, they said the nation's economic activity is moving in the right direction amid a raft of supportive measures implemented in recent months, and economic growth will likely pick up gradually in the coming months.

Meanwhile, they called for more follow-up policies, including stronger fiscal stimulus measures as well as monetary policy support, to ensure a durable recovery.

China's consumer price index, a main gauge of inflation, remained unchanged from a year earlier, down from a 0.1 percent year-on-year rise in August, said the National Bureau of Statistics on Friday.

Liu Zhicheng, director of the commodity market division at the Chinese Academy of Macroeconomic Research's market and price institute, said the flat reading was mainly due to pork prices, which posted a 22 percent year-on-year decline due to factors such as sufficient supply and weak demand.

Meanwhile, Liu said the flat CPI reading was affected by a high comparison base the previous year, while China's core inflation remained steady.

The growth in the core CPI, which excludes volatile food and energy prices and is deemed a better gauge of the true supply-demand relationship in the economy, rose by 0.8 percent year-on-year last month.

On a monthly basis, September's CPI edged up 0.2 percent after a 0.3 percent rise in August.

Looking forward, Liu said consumer inflation will steadily rebound in the fourth quarter amid the continued economic recovery trend, steady recovery in demand and abundant supply of products and services, with the decline in factory-gate prices expected to narrow further.

According to the NBS, China's producer price index, which gauges factory-gate prices, was down 2.5 percent from a year earlier in September after the 3 percent annual contraction seen in August.

Cai Hanpian, a researcher at Peking University's National Economy Research Center, said both the steady growth in core CPI and the narrowing drop in the PPI indicate that China's economic recovery is on track and gathering pace.

"Prices have already bottomed out. Both CPI and PPI will gradually rebound in the following months with the steady economic recovery," Cai said.

The latest economic data has already shown the official snapshot of fresh signs pointing to a steady economic recovery. For instance, China's official manufacturing and nonmanufacturing purchasing managers indexes both improved in September to 50.2 and 51.7, respectively, from 49.7 and 51 in August.

China's economic growth data for the third quarter is scheduled to be released on Wednesday.

A new report released by the Peking University research center estimates that China's GDP will increase 4.5 percent year-on-year in the third quarter due to the lower-base effect and the continued recovery trend. The country is expected to witness improvement in September's key economic indicators.