China's producer price deflation eased in October and consumer prices returned to positive territory, as the government steps up efforts to curb over-capacity and cut-throat competition among firms.

Despite the improvement in headline numbers, analysts warn that deflationary pressures on the world's second-largest economy are not yet over, and the government may have to roll out additional policy measures to spur demand.

"Demand remains weak but a rebound in CPI indicates that supply-side policies are having an effect, and the supply-demand balance in many industries is improving," Xu Tianchen, senior economist at the Economist Intelligence Unit said on Sunday.

"The future trend of inflation will depend on how much demand-side policies are strengthened."

The producer price index fell 2

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