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China's inflation rate hit a 10-month high in February, as Lunar New Year
festivities drove up food prices.
Consumer prices rose 3.2% from a year earlier, with food prices up by 6%.
Inflation has been a hot political issue in China. There have been concerns
that if consumer prices rise too much, it may prompt Beijing to tighten
monetary policies, which in turn may hurt China's growth.
However, analysts said the latest data was unlikely to prompt any such moves.
They argued that the price growth was driven mainly by the Lunar New Year
celebrations, which are traditionally associated with an increase in consumer
spending.
"We expect limited market and policy impact as investors and officials
understand the Lunar New Year distortions quite well," Bank of America Merrill
Lynch analysts said in a note after the data was released over the weekend.
"Though policymakers should be wary of inflation later this year with economic
growth recovery, it's too early to call for significant monetary tightening at
present," they said.
'Big inflationary pressures'
Start Quote
If monetary policy remains at the current loose stance, consumer price index in
2013 will likely be much higher than the 3.5% target set in the National
People's Congress
Zhang Zhiwei Nomura
After years of experiencing a blistering pace of growth, China has seen its
economic expansion slow in recent times.
In 2012, the country grew at a pace of 7.8%, its weakest performance in 13
years.
Prompted by slowing growth, China has taken various steps over the past few
months to spur a fresh wave of economic growth.
It cut interest rates twice last year, to bring down the cost of borrowing for
consumers and businesses. It also lowered the amount of money that banks need
to keep in reserves in an attempt to boost lending in the country.
On the investment front, Beijing approved infrastructure projects worth more
than $150bn ( 94bn).
Some analysts said that if China continued to pursue easy monetary policies,
consumer prices could rise further in the latter half of the year.
"If monetary policy remains at the current loose stance, consumer price index
in 2013 will likely be much higher than the 3.5% target set in the National
People's Congress," said Zhang Zhiwei, an economist with Nomura.
China set a 3.5% inflation rate target for the current year at the National
People's Congress, its annual parliamentary session, last week.
However, in his final appearance at the congress, outgoing Premier Wen Jiabao
warned that keeping prices in check would remain a key challenge for the
policymakers.
"There are relatively big inflationary pressures this year, mainly because
there are pressures on China's land, labour, agricultural products and
services," he said.
"And major countries are stepping up loose monetary policy, so we can't
overlook imported inflationary pressures."