China's steady inflation data and firmer producer prices in September are broadly positive evidence for the economy.
China's consumer price index (CPI), the main gauge of inflation, grew 1.9 percent year on year in September, up from the 1.3 percent rise in August, the National Bureau of Statistics (NBS) said Friday.
For the fifth-consecutive month, figures were lower than the 2.3 percent registered in April, when the CPI reached its highest level since July 2014.
On a month-by-month basis, the CPI rose 0.7 percent in September.
NBS statistician Yu Qiumei largely attributed the moderate inflation growth in September to rising food prices.
The price of fruit and vegetables rose 7.5 percent and 6.7 percent, respectively, year on year in September, compared with 3.9 percent and 0.6percent decreases in August.
In addition, the price of services also increased in September, with education services prices rising 3.2 percent year on year, compared with a 2.2 percent rise in August.
Since January 2016, the CPI has been calculated using a new comparison base and includes more products and services while slightly reducing the weighting of food.
"Today's data suggest that deflation pressures are continuing to gradually ease in the Chinese economy. This has come on the back of stronger demand (due to faster infrastructure investment, and property sector rebound), as well as supply adjustment in the industrial sector," said an HSBC report.
Meanwhile, China's producer price index (PPI), which measures costs at the factory gate, ended a 54-month straight decline in September, according to the NBS.
The reading increased 0.1 percent year on year, the first positive reading since March 2012, said the NBS.
On a month-by-month basis, it increased 0.5 percent amid warming prices in many industries surveyed. The number of industries with increasing prices rose from eight to 25, NBS senior statistician Yu Qiumei said.
The change is closely linked to higher prices in key industries, including ferrous metals metallurgy and coal mining, said Yu in a statement.
Prices in the coal mining industry increased 4.1 percent year on year, increasing for the first time since July 2012, while the ferrous metals metallurgy and rolling industry saw prices increase by 10.1 percent year on year.
The positive reading is also attributable to the country's capacity cutting and destocking, which trimmed oversupply, and recovering commodity prices of crude oil, iron ore and nonferrous metals in the global market, Yu said.
"The first positive reading for the producer price index since the start of 2012 is a broad positive for the economy, boosting profits and lowering real borrowing costs," said Tom Orlik, Chief Asia Economist of Bloomberg.
Jiang Chao, a strategy analyst at Haitong Securities, noted that factors including rising prices of coal and steel suggest the PPI will continue to rise in October with a possible 0.7 percent year on year increase.
While the pace of the improvement is faster than expected in September, there are still risks on the horizon in the next few months, said the HSBC report, noting that reviving private sector business investment remains a key policy challenge in the near term.
Given lingering headwinds to growth, policy makers should retain their easing bias in the near term, it said, forecasting that fiscal policy was expected to remain expansionary with a greater focus on policies that will have a bigger multiplier effect on lifting private sector confidence and investment.
During his three-day inspection visit of Macao Special Administrative Region, Chinese Premier Li Keqiang said on Tuesday that China's industrial growth, corporate profits and investment, especially private investment, were stabilizing and recovering.
The economy in the third quarter not only continued the growth momentum in the first half of this year but also featured some positive changes, the premier said, adding that China was fully capable of maintaining medium to high speed growth.
