Inflation in China likely increased in October, while other key economic data will probably indicate stable expansion, analysts said before the figures are released tomorrow.
Optimism is in the air ahead of a key meeting of the Chinese Communist Party, which starts tomorrow, as the four-day session may shed new light on the pace and direction of reforms, analysts said.
The Consumer Price Index, the main gauge of inflation, is expected to be between 3.2 percent and 3.4 percent in October, up from September's seven-month high of 3.1 percent.
"Inflationary pressure will likely augment because of higher food prices and a low comparative base," said Lu Zhengwei, chief economist at Industrial Bank. "Higher inflation may continue into the second quarter of next year, and force policies to stay neutral."
Chang Jian, an economist at Barclays, also said higher inflation could be led by more expensive vegetables.
But the Producer Price Index, the factory-gate measurement of inflation, was expected to drop as global commodity prices softened last month.
"October data may show moderation in industrial production," Chang said. "But retail sales growth will likely remain strong, benefiting from spending during the National Day holiday."
Both Lu and Chang predicted a rise in exports in October, in part driven by one more working day this October compared with last year.
However, continued weak external demand suggested there was limited upside for export growth in the coming months, Chang said.
Zhu Haibin, chief economist for China at JPMorgan, said the recent economic data provide a favorable backdrop for China's leadership to shift focus back to structural reforms at the third plenary session of the 18th Party's Central Committee.
"The new leaders want to push economic reforms to achieve balanced, inclusive and sustainable growth over the long term," Zhu said.
In the third quarter, China's economy grew 7.8 percent from a year earlier, the fastest pace this year. Investment contributed 56 percent to GDP in the first nine months.
