China's producer price index (PPI), rose at a slower annual rate of 6.6 percent in October, the National Bureau of Statistics (NBS) announced on Monday.
The rise in factory gate prices was down from 9.1 percent in September and the 12-year high of 10.1 percent in August.
The factory gate prices of food climbed 5.4 percent last month from a year ago and those of durable goods slid 0.4 percent.
In addition, the purchasing prices for raw materials, fuel and power rose 11.0 percent in October, down from 14.0 percent in September.
The PPI from January to October rose 8.2 percent from a year earlier, compared with 8.3 percent in the nine months through September, according to the NBS.
This was attributed to declines in commodities prices and the lag effect of earlier tightening measures, said Peng Xingyun, a researcher at the Institute of Finance and Banking under the Chinese Academy of Social Science (CASS).
Wang Tongsan, another CASS researcher of economics, said this came also as the global financial crisis and economic slowdown dampened demand for production materials and Chinese products.
Peng told Xinhua the easing in inflation would provide more room for the Chinese government to loosen macro-economic controls to stimulate the economy.
"There is little chance that inflation would rebound in the near future," Peng told Xinhua. "The government now focuses on tackling the financial crisis and spurring economic growth."
China's gross domestic product expanded at an annual rate of 9 percent in the third quarter, down from 10.1 percent in the second quarter and 10.6 percent in the first quarter.
The central bank had cut borrowing costs three times over the past two months. The State Council on Sunday unveiled a 4 trillion yuan (570 billion U.S. dollars) stimulus package and said it would adopt "active" fiscal and "moderately loose" monetary policies.
Peng predicted the consumer price index (CPI), the main gauge of inflation, could be less than 4 percent in October. The CPI was 4.6 percent in September.
The NBS is slated to announce October's CPI data on Tuesday.
(Xinhua News Agency November 10, 2008)