Inflation in China slows most in three years

Inflation in China slowed by the most in almost three years, which gave officials additional room to support growth with industrial production and the property market cooling and a threat looming large on exports due to the European crisis.

Consumer prices were up 5.5 per cent in October as against a year earlier, according to the statistics bureau's website today. The 0.6 percentage point decline from September's rate was the highest since February 2009 with industrial output growth declining to 13.2 per cent.

Economists expect the government of premier Wen Jiabao to loosen fiscal or monetary policy with no cut in interest rates as inflation stays above a full-year target of 4 per cent, according to a Bloomberg News survey, this week. According to HSBC Holdings Plc the ''targeted easing'' may include measures to support smaller businesses and the construction of public housing and infrastructure.

According to some analysts, the combination of easing inflationary pressures, a protracted euro debt crisis and a potential property market slump had set the scene for an imminent policy easing. They add that the time was right  for a cut in lenders' reserve requirements.

Industrial output registered the least growth in a year as compared with a 13.8 per cent gain in September, Bloomberg data showed. The median estimate by economisits' was for a 13.4 per cent gain.

Housing transactions were down 25 per cent from September, according to today's data.