China's consumer price inflation slowed down in November in contrast to analysts' expectations, in fresh indication that the economy's recovery is gaining momentum.
China's National Bureau of Statistics (NBS) said the country's headline consumer price index (CPI) inflation declined to 3.0% year-on-year in November, compared to analysts' expectations of 3.2%. In October, the CPI inflation stood at 3.2%.
The yearly decline was primarily due to a drop in food prices, according to the NBS. Food inflation declined to 5.9% in November from 6.5% in October.
On a monthly basis, inflation declined by 0.1% in November, compared with a 0.1% increase in the previous month.
For the first nine months of 2013, inflation was 2.6%, well below the government's full-year target of 3.5%.
The favourable inflation data comes as China moved out of a growth slowdown in the third quarter, during which the country posted a gross domestic product (GDP) growth rate of 7.8%.
Earlier, the country reported better exports data and improved factory and service sector activity, confirming its growth momentum.
China is currently the world's fastest-growing major economy with annual gross domestic product growth rates averaging 10% for the last 30 years.
However, the global economic crisis did also impact China, following its growing ties with the international markets. Economic growth has slowed down in 11 of 14 previous quarters. The country's economy grew by 7.7% in 2012, the slowest pace in 13 years. The slowdown had expanded into the first two quarters of 2013.
Liquidity Pressures Persist
"While inflation pressures remain manageable, the liquidity tightness will likely persist at least till Chinese New Year, which indicates that the Chinese authorities intend to force the commercial banks to reduce the leverage ratio," said economists at ANZ Research.
They noted that the reduced lending by commercial banks and higher funding costs will affect corporates, posing a downside risk to economic growth. ANZ expects the full-year growth rate to slow down to 7% in 2014.
The International Monetary Fund had earlier lowered its 2013 growth outlook for China from 8% to 7.6%. The agency also reduced 2014 forecast by a percentage point to 7.3%.