The producer price index, the gauge of factory-gate inflation, rose 2 percent year-on-year in November, down from 6.6 percent in October.

The latest PPI figures, the lowest in 31 months, showed inflationary pressure has continued to ease over the past month, as gloomy global economic prospect has dampened commodity prices.

"In 2009, there is a possibility that China's PPI will temporarily dip into negative territory, given the sharp fall in commodity prices," said Jing Ulrich, JP Morgan's Managing Director and Chairman of China Equities.

Crude prices declined 14.7 percent year-on-year in the past month, said the National Bureau of Statistics on Wednesday morning. Gasoline, diesel and kerosene dropped 19.7 percent, 7.9 percent and 22.3 percent respectively.

After peaking at 10.1 percent in August, a 12-year high, the PPI has been declining.

The November consumer price index, scheduled to be released for Tuesday, is likely to drop below 3 percent, analysts say.

(China Daily December 10, 2008)