* Sept CPI may have eased to 1.9 pct y/y; PPI down 3.6 pct
* PPI fallen most of this year; inventory cuts seen limiting falls
* Softer prices give policymakers some policy flexibility
* CPI and PPI due Oct. 15 By Lucy Hornby
BEIJING, Oct 9 (Reuters) - China's annual consumer price inflation likely softened to 1.9 percent in September, flirting with July's two-and-a-half year low, with producer prices set to record their steepest drop since October 2009, a Reuters poll of 26 economists found.
Easing consumer prices and outright falls in factory gate prices are fresh signs that the world's second-biggest economy is struggling to escape the tug of a global slowdown that has set China on course for its weakest full year of growth since 1999.
The economists' median forecast for a 1.9 percent rise in China's consumer price index
last month from a year earlier represented a slight softening from August's increase of 2.0 percent.
They predicted the producer price index would drop by an annual 3.6 percent, the largest fall since China pulled out from the global financial crisis, versus a 3.5 percent drop in August.
"Seasonally, vegetable prices are clearly falling and although pork prices have risen a little, overall, the agricultural price gains compared with the previous month have been less than expected, driving CPI to a lower level than forecast," Ping'an Securities said in a research note.
Limp prices have given some flexibility to policymakers to gently ease monetary policy to support growth without raising inflationary risks, but they also likely confirm a widely-held view among analysts that China will register a seventh straight quarter of slowing growth in the July-September period.
China's economic slowdown is expected to reach its nadir in Q3, with a recovery of momentum delayed until the final quarter, leaving growth for 2012 likely to fall below 8 percent, a level unseen since 1999, a Reuters poll earlier in September showed.
The central bank has responded by cutting interest rates twice this year, giving banks more freedom to set borrowing costs by liberalising rates at the margin and released an estimated 1.2 trillion yuan ($190 billion) for lending by lopping 150 basis points from required reserve ratios in three moves since November last year.
Official CPI and PPI figures will be released on Monday, Oct. 15, while third quarter GDP data will be published on Thursday, Oct. 18.
Producer prices have fallen for most of this year, as falling demand has dragged down commodity input costs.
Some respondents pointed to inventory cuts as helping to shore up prices for raw materials such as steel, thus limiting the drop in producer prices.
Ping'an, for instance, expects producer prices to hit their lowest point for 2012 in September and rebound in October, while others, like UBS, note that China's destocking continues.
That impression is in line with the most recent HSBC manufacturing purchasing managers index, where a sub-index measuring stocks of finished goods edged down to its lowest level since April, approaching the 50-point line that separates expansion from contraction.
The sub-index measuring input prices remained below 50 for the fifth month in a row, according to the HSBC PMI.
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(percent change from a year earlier)
FORECAST PPI CPI ANZ -3.5 1.8 Bank of Communications -2.4 1.8 BBVA -4.0 1.8 BOC International Securities -3.1 2.2 BofAML -3.8 1.9 CDB Securities -3.3 2.0 China Construction Bank -3.2 1.8 CICC -4.0 1.8 CITIC Securities -3.5 2.0 Deutsche Bank -3.3 1.7 Everbright Securities -3.7 2.0 Goldman Sachs -3.7 1.7 Huarong Securities -3.6 1.9 Hwabao Trust -3.2 1.9 Industrial Bank -4.0 1.9 ING Financial Markets -3.0 2.0 JPMorgan Chase -3.3 1.8 Mizuho Securities -3.4 1.9 OCBC -3.7 1.8 Peking First Advisory -3.7 2.0 Pingan Securities -3.7 1.9 Sealand Securities -3.8 2.0 Shanghai Securities -3.6 2.3 Shenyin & Wanguo -3.5 1.9 Societe Generale -3.7 1.9 UBS -3.4 1.8
Median -3.6 1.9 High -2.4 2.3 Low -4.0 1.7
> For more stories on China's economy
> China's economic indicator calender and polls
> All Chinese economic data (Editing by Jacqueline Wong)
Keywords: CHINA ECONOMY/CPI