China's economic activity will continue to show a small pickup in domestic activity, with stable Consumer Price Index inflation and slowing Producer Price Index deflation, investment bank Barclays said in a research note on Wednesday.

"We forecast that CPI inflation will edge up to 2 percent in October on flat food inflation and a slight pickup in non-food inflation," said Chang Jian, an economist with Barclays.

PPI deflation has slowed on higher raw material prices and recovering demand, as suggested by the weekly producer price data for nonferrous metals, minerals, and chemicals, Chang said, adding that he expects PPI to fall to 2.7 percent in October.

China will release October inflation figures on Friday, followed by trade figures on Saturday.

An uneven recovery across industries and still-soft export orders suggest a sharp near-term rebound remains unlikely, the research note said.