China's annual inflation rate fell to 5.5pc in October from September's 6.1pc, the biggest drop since February 2009 and a further decline from July's three-year peak of 6.5pc. The figure was in line with analysts' expectations.
China has identified inflation as a key threat to stability and Premier Wen Jiabao said prices had fallen further since October. "Since October, overall domestic prices have been falling noticeably," he was quoted as saying by a government website.
The data soothed investors' concerns about a sharp slowdown, supporting commodity prices and underpinning Chinese shares. With inflation apparently coming under control, speculation is growing that Beijing will start favouring pro-growth policies again, helping support weakening global growth.
China's leaders have recently spoken about "fine tuning" economic policy to recharge growth, which slowed in the third quarter to 9.1pc, its weakest in more than two years. However, inflation remains too high for an imminent cut in interest rates ? at well above the government's 2011 target of 4pc.
In October last year, Chinese authorities began tightening monetary policy in an effort to cool prices. The People's Bank of China has since raised the interest rate five times, and increased banks reserve requirements nine times.
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