China's consumer prices rose a year-on-year 2.8 percent in November the slowest pace in nine months, which reduced the possibility of a further interest rate hike in the near term.

The sharp drop in the consumer price index (CPI), Chinese policy-makers' key inflation gauge, was partly due to the higher base from November 2003, when inflation began to accelerate, said Liang Hong, an economist with the investment bank Goldman Sachs.

The CPI was 4.3 percent in October, 5.2 percent in September, and 5.3 percent in August and July.

"However, even on a sequential basis, the decline in CPI is sharper than expected," Liang said in a statement sent to China Daily.

Food prices, which had been the main driver of higher CPI this year, grew a year-on-year 5.9 percent in November, down from 10 percent in October, figures from the National Bureau of Statistics indicate.

The upstream producer price index also eased slightly from 8.4 percent year-on-year in October to 8.1 percent in November. The fall in CPI reflects the lagged effects of the administrative tightening which started in the second quarter of 2004, Liang said.

"Therefore, with the recent ease in inflation, any further tightening measures, either administrative or a rate hike, will be off the table in the near term," she said.

Ren Xingzhou, a senior researcher with the State Council Development Research Center, said November's CPI figure was in line with an earlier prediction of her organization.

"The CPI will continue to decline slightly in December," she told China Daily in a telephone interview.

The CPI is expected to rise about 4 percent for the whole of 2004, she said.

Qi Jingmei, a senior economist with the State Information Center, said November's CPI almost hit the bottom.

"It should not drop further to about 1 or 2 percent in December and the coming months," she told.

The country is still facing increasing price pressures, she said. The rising prices for energy and raw materials will propel producer prices of industrial products.

Higher producer prices and growing price pressure from public utilities such as water and electricity would have an impact on the future consumer price index, she said.

The country's CPI is likely to rebound in the first half of next year, she said.

This will increase the possibility of a further interest rate hike, she said.

The worldwide rate hike will also encourage the central bank to make further decisions, she said.

The , the central bank, raised the benchmark interest rates on October 29, the first time in nearly a decade.