Chinese expansion slowed to its lowest rate in nearly a quarter of a century in 2014 and has continued to weaken this year with demand remaining subdued.

The country's consumer price index (CPI) -- a main gauge of inflation -- rose 1.6 year-on-year in September, the National Bureau of Statistics said, less than August's 2.0 percent.

The producer price index (PPI), which measures the cost of goods at the factory gate, fell 5.9 percent year-on-year in September, matching August's figure, which was a six-year low.

"The still weak PPI highlights the severe overcapacity problem and sluggish domestic investment demand," said Nomura economists in a research note.

Moderate inflation can be a boon to consumption as it pushes buyers to act before prices go up, while falling prices encourage shoppers to delay purchases and companies to put off investment, both of which can hurt growth.

Beijing is trying to transform the country's economic model to a more sustainable one where consumers replace exports and state-led investment as the key driver of expansion.

But as investment in infrastructure slowed, Chinese growth hit a 24-year low of 7.3 percent in 2014 and has softened further this year, with gross domestic product increasing 7.0 percent in each of the first two quarters.

Both domestic and overseas demand have slackened, while the key property market has also weakened, hitting demand for construction materials.

Plants -- many of them state-owned -- are loath to drastically cut employees, leading to continued production even when demand is weak, putting more downward pressure on prices.

The benchmark Shanghai Composite Index closed down almost 1 percent Wednesday, ending a five-day winning streak, while stocks in Asia and Europe also fell.

Data on Tuesday showed imports plunged by a fifth year on year in September as slowing growth wreaks havoc on global commodities values. Exports also slipped in the same period, according to the figures.

- 'Need for easing' -

The International Monetary Fund last week warned that China could be headed for a hard landing unless leaders get a grip on the current economic challenges.

Authorities have taken a series of measures to support growth, including five interest rate cuts since November and a discount on purchase taxes of some cars.

But analysts said more needs to be done to put a floor on the slowdown.

"We reiterate that China needs to ease monetary policy," ANZ analysts said in a report, calling for a further reduction in bank reserve requirements -- which should boost lending -- before the end of the year, plus another interest rate cut "if CPI falls further".

The fall in September inflation was mainly driven by easing food price rises, according to the NBS.

Consumer inflation has been at or below 2.0 percent for all of 2015, while the drop in PPI -- a leading indicator for CPI -- was the 43rd consecutive monthly fall.

In the first nine months of the year, CPI rose 1.4 percent from the same period in 2014, well below the government's target of an increase "around three percent" this year.

China is slated to release third-quarter growth statistics on Monday.