(Yicai) Dec. 11 -- China’s consumer prices fell for a second month in a row in November, while factory gate prices dropped for the 14th consecutive month, pulled down by lower food and crude oil costs. Consumer inflation should return early next year, according to China Minsheng Bank.

The consumer price index fell 0.5 percent last month from a year earlier, the steepest decline in three years, after a 0.2 percent dip in October, data released by the National Bureau of Statistics showed on Dec. 9.

Fast-falling food and crude oil prices were the main reasons for the drop, said Wang Qing, chief macroeconomic analyst at Golden Credit Rating International.

The core CPI, which excludes food and energy prices, rose 0.6 percent, the same rate as in October.

Stable growth in the core CPI suggest that a deflationary pattern has not yet formed, and there is ample room for policies to spur consumption in the future, Wang noted.

Considering the ongoing recovery in demand for goods and services, rapid growth in the M2 broad money supply, and reasonable liquidity in the market, the situation will gradually ease and there will be no deflation, said Liu Aihua, the spokesperson for the National Bureau of Statistics.

The CPI is expected to bounce back by February, as economic support policies take effect, according to a prediction by China Minsheng Bank. CPI growth will bounce back to around 1.3 percent next year from 0.4 percent this year, Wang said.

The producer price index sank 3 percent in November, accelerating from declines of 2.5 percent in October and 2.5 percent in September, the NBS data showed.

The drop can be attributed to fluctuations in international commodity prices passing into the domestic market, Wang said, adding that other factors include insufficient domestic demand for investment and consumption and relatively weakened growth momentum in factory prices of industrial products and consumer goods.

Industrial product prices still face downward pressure due to imbalanced supply and demand, according to Huachuang Securities. China’s manufacturing sector remained in contraction territory for the second straight month in November.

The PPI will fall a little this month, according to Wang.

The PPI will continue falling for the next six months, as imported inflation will remain weak because of the global economic slowdown and the short-term recovery in external demand will stay relatively milder, China Minsheng Bank noted.

Editor: Futura Costaglione