Beijing has in recent years been grappling with sluggish domestic spending, weighed down by a persistent slump in the country's vast property market.

China's consumer price index -- a key measure of inflation -- dropped 0.3 percent year-on-year in September, according to the National Bureau of Statistics (NBS).

The reading was worse than the 0.2 percent fall forecast in a Bloomberg survey.

It also comes after the International Monetary Fund's latest World Economic Outlook report noted Tuesday a "weakness in domestic demand" in China -- echoing a broader Asian outlook dimmed by the US trade war.

While deflation may be appreciated by consumers, it poses a threat to the broader economy as households tend to postpone purchases in the hope of even lower prices.

The NBS figures also showed the producer price index, which measures the cost of goods before they enter wholesale or distribution, fell 2.3 percent last month.

That was an improvement on the 2.9 percent fall recorded in August and in line with the Bloomberg forecasts.

China's economic situation has worsened with the heightened turmoil sparked by US President Donald Trump's trade war.

While tensions between Washington and Beijing have de-escalated from their peak, a truce struck by the leaders earlier this year remains shaky.

Beijing imposed fresh controls on the export of rare earth technologies and other items last week, leading Trump to warn Friday that he would roll out an additional 100 percent tariff on the country's goods from November 1.

China's commerce ministry vowed Tuesday to "fight to the end" in its trade war with Washington, if necessary.