China's headline consumer price index was unchanged on the year in September after increasing 0.1 percent in August. The index advanced 0.2 percent on the month after an increase of 0.3 percent previously. Food prices fell 3.2 percent on the year after a fall of 1.7 percent previously, with officials attributing this sharper decline to strong supply ahead of national holidays at the start of October. The year-over-year increase in non-food items picked up from 0.5 percent to 0.7 percent.

Today's inflation data provide further evidence that economic conditions remain subdued, broadly in line with previously published PMI surveys and official activity data. Ongoing weakness in the property market remains a particular concern for officials and may prompt measures aimed at supporting stronger demand.

The fall in headline CPI inflation to zero was below the consensus forecast for an increase of 0.2 percent, while the month-over-month increase of 0.2 percent also fell short of the consensus forecast of 0.3 percent. The China RPI and RPI-P fell from plus 7 to minus 34 and from zero to minus 20 respectively, indicating that recent Chinese data in sum are now coming in below consensus forecasts.

After August's nearly as-expected 0.1 percent year-over-year rate, September is expected to edge up to a nearly as microscopic 0.2 percent. China's CPI last peaked in January at 2.1 percent.

Consumer Price Index (CPI) is an index that measures changes over time in the price level of consumer goods and services purchased by residents, which reflects the overall changes in price level.

Consumer prices account for a majority of overall inflation, which is carefully monitored by investors worldwide. Investors worldwide monitor Chinese price changes closely. A pickup in inflation could mean an increase in interest rates is in the offing from the People's Bank of China while an easing could mean looser monetary policy. The monthly CPI is broken down by 8 categories with more detail available on the following day including aggregate information by urban and rural areas and provinces.

The CPI measures the change in the level of prices for a specified basket of goods and services normally purchased by urban and rural residents. Approximately 226 areas throughout the country are covered, including 80 counties and 146 cities. The current CPI is an annually chained Laspeyres price index and has been available since 2001. From 1978 to 2000, the index was compiled using current year weights for most items.