China’s inflation remained stable in September as consumer prices were stable and factory gate prices saw comfortably strong increases.

China’s Consumer Price Index (CPI) stayed almost unchanged from August and rose by 1.6 percent in September from a year ago. The biggest component of the consumer price index — food prices fell by 1.4 percent from a year earlier, which is the major factor behind the slowing down pace of the CPI.

The CPI retreated mildly, weighed down by dropping food prices, while growth in the producer price index (PPI) hit a six-month high on demand for commodities.

It was the eighth straight month for the main gauge to stay beneath the 2-percent mark. On a monthly basis, the index was up 0.5 percent, slightly higher than 0.4 percent seen in the previous month.

“As disposal incomes grow, people’s consumption becomes more diversified. That includes tourism, Medicare, education and so on. The prices for these services will go up,” Wang Jinbin, deputy dean of the Economics Department at Renmin University of China.

The PPI rose by one percent from August in September and accelerated to a six-month high to 6.9 percent. Prices for commodities-related products such as metals, coal and oil continued to rise.

Besides a rally in commodities prices, the government’s crackdown on excessive and polluting firms also pushed prices higher.

The PPI has been soaring since the end of 2016, evidence of recovering economic growth, albeit with rising concerns of overheated factory activity and chain reactions in consumer prices.

Analysts predict producer inflation will gradually stabilize during the rest of the year and the consumer prices will remain subdued.

“A rising PPI reflects China’s success in restructuring its industries,” said Tan Yaling, director of China Forex Investment Research Institute.

That opinion is shared by Zhao Zhongxiu, vice president of University of International Business and Economics. Zhao said that the PPI surge results from the deleveraging and de-capacity efforts and that the technology sector with high efficiency has been improved.

Between the rising PPI and easing CPI, Zhao said the monetary policy would continue with its recent path — a bit of increase in money supply to stimulate demand and ensure economic growth in the near future.

Zhao, along with many other analysts, is expecting the growth rate to beat the target of 6.5 percent and even higher. In that case, the rest of September’s economic data will likely to come out better later this week, including the investment amount and forex reserve, Zhao said.

The People’s Bank of China (PBOC) at the end of September announced a targeted reduction in the amount of cash lenders must hold as reserves to promote inclusive finance and encourage credit support for small businesses, impoverished groups, and agriculture, among others. Analysts expect hundreds of billions of yuan to reach the real economy.

September’s data also added to signs of a solid economy, which may defy market expectations of a loss of momentum. Major economic indicators including GDP, industrial output and investment are scheduled to be released by the NBS on Oct 19.

China posted a better-than-expected GDP increase of 6.9 percent in the first half of the year, well above the target of around 6.5 percent for the whole year.

At the annual meeting of the International Monetary Fund and the World Bank in Washington on Oct 15, PBOC Governor Zhou Xiaochuan said the economy would likely expand by 7 percent year-on-year during the remainder of 2017 thanks to booming household consumption.