China's inflation slowed sharply in November, while industrial production growth slowed and residential property sales fell, raising the odds that authorities will loosen monetary policy further to support growth.
China's consumer price index rose 4.2% in November from a year earlier, slowing from October's 5.5% rise, data from the National Bureau of Statistics showed Friday.
The rise in the key inflation gauge undershot the median 4.4% gain forecast by 16 economists in a Dow Jones Newswires survey.
It was the lowest inflation reading since September 2010.
"The government should accelerate loosening efforts and make stimulating economic growth a more prominent priority," HSBC economist Ma Xiaoping said.
Last week China's central bank cut the reserve-requirement ratio for banks, in what economists expect will be the first of a series of measures to loosen macroeconomic policy as inflation and economic growth slow.
Meanwhile, the producer price index, an indicator of upstream inflation pressures, slowed even more sharply, rising just 2.7% from a year earlier, compared with a 5% rise in October and economists' expectations for a 3.2% gain. November's PPI rise was the slowest since December 2009.
China's value-added industrial output rose 12.4% in November from a year earlier, slowing from October's 13.2% increase. Economists had forecast a 12.5% rise.
Fixed-asset investment in nonrural areas rose 24.5% in the January-November period compared with the year-earlier period, down from 24.9% in the January-October period and below economists' expectations for a 24.7% increase.
"We're seeing a steady deceleration rather than a sharp slowdown like that in the fourth quarter of 2008," Royal Bank of Canada economist Brian Jackson said. "If that's the way it continues for the next few months it's not hugely alarming."
Property-development investment, a key contributor to economic growth in China, rose 29.9% year-to-year to 5.55 trillion yuan ($871.41 billion) in the January-November period, slower than a 31.1% rise to 4.99 trillion yuan in the January-October period.
Measured by floor space, year-to-year growth in housing sales eased to 7.5% in the 11 months ended Nov. 30, from 9% in the first 10 months of the year, the data showed.
The National Bureau of Statistics didn't release November-only data for residential property sales, but according to a Dow Jones Newswires calculation, sales measured by floor space fell 3.3% in November from a year earlier, following a decline of 11.6% in October.
Declining inflation might hurt the property market further by making it a less attractive investment compared to bank deposits, IHS economists Xianfang Ren and Alistair Thornton said in a research note.
"As CPI falls, real deposit rates edge closer to positive, and should begin to act as a draw for household deposits," they said. "Perversely, this should provide further downward pressure on the property market, as yield-seeking households err towards the banking sector rather than the sliding real estate sector."
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