China may end its recent spate of deflation within this year because of rising commodity prices, but that doesn't mean the country should change its monetary policy anytime soon, analysts said yesterday.

The Consumer Price Index fell 0.5 percent last month from a year earlier, compared with contractions of 0.8 percent in September and 1.2 percent in August, the National Bureau of Statistics reported yesterday. The main gauge of consumer inflation has been in negative territory for nine straight months.

Declines in Producer Price Index, the factory-gate benchmark, moderated to 5.8 percent last month from 7 percent a month earlier, the bureau said.

"Prices are still declining," said Matthew Circosta, an analyst at Moody's Economy.com. "However, as many commodity prices - most noticeably fuel prices - are rebounding, they are no longer contributing as much to the decline in consumer prices as they did previously."

The prices of gasoline and diesel both went up 480 yuan (US$70) a ton on Tuesday to reflect high crude costs on the global market.

Li Xunlei, an analyst at Guotai Jun'an Securities Co, said China is stepping away from deflation.

"China's consumer prices may rise again within this year and possibly register 3-percent growth next year," Li said.

Li believes growth of that magnitude wouldn't hamper China in continuing its relaxed monetary policy, which has been important in sustaining economic growth.

Wang Qing, a Morgan Stanley economist, also said monetary tightening won't take place until the second half of next year, although authorities will likely use regulatory and sector-specific measures to contain financial leveraging and limit risk.

Li Xiaochao, spokesman for the National Bureau of Statistics, said last month that inflation was not an immediate concern for China and the country would stick to its current policies.

The nine-month stretch of deflation, however, did not prevent a robust expansion in China's domestic consumption. Retail sales last month jumped 16.2 percent to 1.17 billion yuan (US$171 million), up 0.7 percentage point from a month earlier.

Deflation is considered harmful to a country's economy because people may delay their spending in the expectation that prices will fall further.

Retail sales in the first 10 months rose 15.3 percent year on year to more than 10.1 trillion yuan, up 0.2 percentage point from the January-September period.