China inflation eases to 5.5 per cent after three-year high of 6.5 per cent

China's consumer prices were up at 4.2 per cent as against the same month last year, the National Bureau of Statistics revealed today.

Inflation was at 5.5 per cent in October, after it touched a three-year high of 6.5 per cent in July. According to analysts, this created more room for authorities to ease monetary policy and encourage economic growth.

Due to the slowing pace of inflation Chinese authorities could turn their policies more towards growth as Europe's crisis started to affect Asia.

China had seen demand for its products fall, as consumers in Europe and the US cut back on spending with growth slowing in those regions.

Manufacturing activity shrank in November for the first time in 33 months, according to data and the indicators had increased concern that China could be headed for a slowdown.

In what came to be seen as a shift in policy towards growth, China, last week cut the amount of money banks are needed to keep in reserve.