China's consumer inflation fell to a five-year low of 1.4 percent in November, the government said Wednesday, fuelling concern about the danger of deflation in the world's second-largest economy.

The news comes after the central People's Bank of China on November 21 shocked markets by cutting interest rates for the first time in more than two years to kickstart the slowing economy. Analysts said they expect further easing measures in the new year.

The rise in the consumer price index (CPI) is the lowest since November 2009, coming in short of a median forecast of 1.6 percent in a Wall Street Journal survey of 16 economists and marking a slowdown from October's 1.6 percent.

The National Bureau of Statistics also said the producer price index (PPI) -- a measure of costs for goods at the factory gate and a leading indicator of the trend for CPI -- fell 2.7 percent year-on-year, the worst reading since a similar decline in June 2013.

The last PPI increase was in January 2012.

The figures point to further downward pressure on economic activity in China, a key driver of global growth, after trade figures Monday showed imports unexpectedly fell and exports grew far slower than forecast.

The country has also been hit by disappointing manufacturing activity, tumbling property prices and nagging concerns over corporate and local government debt.

"China has entered into a rapid dis-inflation process, and faces the risk of deflation as commodity prices continue to trend lower and growth is expected to slow further in the coming year," ANZ economists Liu Li-Gang and Zhou Hao wrote in a reaction to Wednesday's data.

While moderate inflation encourages consumers to buy before prices go up, falling prices lead shoppers to delay purchases and companies to put off investment, both of which can hurt growth.

Once deflation starts it can be hard to overcome as Japan has found after years of policy experiments aimed at ending it.

Chinese stocks closed higher after the inflation data, with the Shanghai Composite Index rising 2.93 percent, or 83.74 points, to 2,940.01. Dealers cited increasing hopes for more policy easing.

The benchmark rebounded following a plunge of more than five percent Tuesday on profit-taking.

- Further easing expected -

Wednesday's figures were far below the government's 2014 inflation target of 3.5 percent. Nomura economists said in a note after release: "We expect inflation to remain below 2.0 percent in 2015, which may raise concerns of deflation and trigger more policy easing."

Economists have been expecting further measures after last month's rate cuts, including reductions in reserve requirements -- the amount of cash banks must keep on hand. Cutting the level means more money is available for lending, which can stimulate the economy.

The Nomura economists said they expect one more interest rate cut in the second quarter of 2015, with reserve requirement ratio (RRR) reductions in each quarter of next year.

Investment bank China International Capital Corporation argued for lower benchmark interest rates and RRR cuts given what it described as a "significantly" increased risk of falling prices.

"Higher deflation expectations in the real economy will lift the level of real interest rates, further curbing aggregate demand and in turn reinforcing deflation expectations," it said in a note. "Therefore, counter-cyclical monetary policy easing is strongly needed."

But Julian Evans-Pritchard, China economist at Capital Economics, said that while price rises should ease further heading into 2015, worries about deflation risks were overblown despite the worsening producer prices figure.

"Industrial input costs are falling, on the back of lower commodity prices, but the factory gate price of final consumption goods has remained broadly flat and so many firms are actually better off," he wrote in a reaction.

China's top leaders opened a meeting Tuesday to craft economic policies for 2015, including growth and inflation targets.

Gross domestic product growth came in at 7.3 percent in the third quarter, the slowest since the height of the global financial crisis in early 2009.

China had set its GDP target at about 7.5 percent for 2014 and analysts are broadly expecting it to be reduced to as low as 7.0 percent for next year as authorities try to transform the economy to make consumer spending the key growth driver.