GUANGZHOU: Guangdong's consumer price inflation and producer price index (PPI) eased in October, prompting the provincial government to introduce further measures to stimulate the economy.

The consumer price index (CPI), the main gauge of inflation, rose 3.8 percent, year-on-year, in the province, but dropped half a percentage point compared with September, the Guangdong Provincial Survey Office under the National Bureau of Statistics (NBS) said yesterday.

The provincial index was also lower than the national level of 4 percent in the same month, NBS figures released on Tuesday show.

The CPI from January through October rose 6.4 percent year-on-year in the province, according to official statistics.

"Consumer prices are now moving downward," said Feng Shengping, a researcher with the Guangdong provincial situation study and research center.

The food price index, seen as a major contributor to consumer prices, rose by 9.2 percent year-on-year last month, or a relative increase of half of a percentage point compared with September.

Specifically, fresh vegetable prices were up 15.1 percent year-on-year, or 17.4 percentage points higher than September.

"The dramatic increase in vegetable price over September resulted from the cooling weather," said Feng.

Housing prices recorded a year-on-year increase of 2.1 percent in October, a drop of 3.4 percentage points from September, amid fears of continuous slowdown in the real estate market in the Pearl River Delta region.

The CPI growth rate has been sliding since May, thanks to local policymakers' efforts to curb rising consumer prices and maintain steady economic growth.

Along with the CPI growth rate decline, the PPI, a gauge of factory gate inflation, saw a year-on-year increase of 2.3 percent last month.

But the figure dipped 1.7 percentage points from September, because of higher prices of key raw materials, oil and metals on the global market.

The prices of ferrous metal rose by 14.8 percent, year-on-year, a dramatic drop of 10 percentage points from September.

"The decline of CPI and PPI growth will give more room for local governments to support the economy as the province has been, to some degree, affected by the global economic and trade slowdown," Feng said.

To stimulate the economy, the provincial department in charge of development and reform has announced a 2.37-trillion yuan development plan involving 10 big projects with 222 sub-projects in the coming five years.

(HK Edition 11/13/2008 page2)