China’s cooler than expected inflation numbers brought Asian stocks down Tuesday while producer prices continued their slide to a 43rd straight month.

The consumer price index (CPI) rose 1.6 percent in September from a year earlier, the National Bureau of Statistics (NBS) said on Wednesday, lower than expectations of 1.8 percent and down from August’s 2.0 percent.

The inflation data released on Tuesday showed that the country’s dollar-denominated imports plunged 20.4 percent in September, its 11th consecutive month of decline, while exports fell 3.7 percent from a year earlier increasing concerns about deflationary pressures in the world’s second-largest economy.

According to IG’s market analyst Angus Nicholson, “The positive emerging price pressures seen in the August data are increasingly looking like a one-off. Food and consumer goods prices eased noticeably from August, which is a negative for Chinese consumption – one of the bright spots in China’s slowing economy. This slowdown was further emphasized in the Core CPI number (ex-food and energy) which slowed to its weakest reading since May.”

Small Cuts Expected

Citing the producer price index(PPI) that fell 5.9 percent from a year ago, the biggest drop since the depths of the global financial crisis in 2009, economists at Nomura, a financial services group and global investment bank based in Tokyo, expect one more cut to banks’ reserve requirement ratio (RRR) by the end of this year and another four in 2016, each by 50 basis points (bps), together with two more interest rate cuts of 25 bps each next year.

According to Nomura, “Given the lackluster growth outlook, we continue to expect moderate fiscal stimulus from the central government and continued monetary easing.”