Chinese retail sales rose 5.5 percent on the year in September after growth of 4.6 percent in August, well above the consensus forecast for an increase of 4.8 percent. Sales rose 0.02 percent on the month after advancing 0.31 percent previously.

In a statement accompanying today's activity data, officials described China's economy as having"sustained the momentum of recovery and improvement" with both demand and production increasing. The statement provided little guidance, however, about whether officials consider that further policy support will be required, merely noting that policy is continuing to be implemented"in a precise and robust way" to expand domestic demand and boost confidence.

GDP and monthly activity data published today were stronger than expected. The China RPI and RPI-P rose from minus 41 to plus 16 and from minus 30 to plus 50 respectively, indicating that recent Chinese data in sum are now coming in above consensus forecasts.

After posting stronger-than-expected annual growth of 4.6 percent in August, year-over-year sales in September are expected to rise 4.8 percent.

Retail Sales measure goods that are sold to the consumer or end-user, generally in small quantities and in the state in which they were purchased by the retailer. China's retail sales are reported monthly. The critical value is the change from the same month in the previous year.

Retail sales tend to have a muted impact because the Chinese economy is not heavily reliant on consumer spending. However, the government is trying to stimulate consumer spending to give the economy more balance. To this end, the government put into place a basket of stimulus measures, including government subsidies and tax breaks for home appliances and cars, to expand consumption to sustain the economic growth, which was slowed by a slump in exports amid the global economic downturn.