China's consumer inflation increased for the second-straight month in October. The rise was higher than expected and was caused by imploding food prices. However, it remained below the official upper limit. The rate of increase was the highest in six months.

According to the National Bureau of Statistics (NBS), the consumer price index for the month of October increased by 2.1 percent on year-over-year basis. The increase was in line with the projections of Reuters polls. The rate of increase in consumer inflation in September was 1.9 percent.

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Food prices in the month of October increased by 3.7 percent, while the growth rate for the previous month was at 3.2 percent. Non-food prices increased by 1.7 percent, up from a 1.6 percent increase in the month of September.

The consumer inflation is likely to have limited upside. Capital Economics economist Julian Evans-Pritchard said in a note that "The scope for further rises in consumer price inflation is likely to be more limited given that credit growth has begun to slow." The note also took cognizance of the stabilizing housing prices.

Factory price inflation followed the trend shown by consumer inflation. It registered a 1.2 percent year-over-year increase, the fastest acceleration since December 2011. The forecast for the increase stood at 0.8 percent. The increase in factory prices also provided a boost to industrial profits.

The Chinese economy is showing steady performance as it grew by 6.7 percent during the third quarter. It is on the course to achieve its targeted full-year economic growth rate. Elevated government spending and the country's booming housing market are the main drivers behind the performance. 

TagsConsumer Inflation, National Bureau of Statistics, Factory price inflation