China's inflation rebounds sharply in March

Consumer price index rises to 3.6 per cent as bad weather and government policies push up food and fuel prices.

    Analysts expect economic growth over past three months to fall to a new low of about 8 per cent [Reuters]
    Analysts expect economic growth over past three months to fall to a new low of about 8 per cent [Reuters]

    China's inflation rate edged up in March as the country shifted from containing price rises to boosting growth in the world's second-largest economy.

    Consumer prices rose 3.6 per cent over a year earlier, up from February's 3.2 per cent but below the government's 4 percent target for the year, data showed Monday.

    The increase was driven by a hike in state-set fuel prices and a 7.5 per cent rise in politically sensitive food costs, up from the previous month's 6.2 per cent but well below last year's double-digit rates.

    David Maan, the head of Mahon China, a Beijing-based investment company, told Al Jazeera the rise in rate was not too significant.

    “Inflation in food in China in general terms has been coming down over the last 12 months. As long as china maintains overall inflation at under 5 per cent, its economy is in good shape.

    Beijing shifted focus from cooling prices to shoring up economic growth in December after inflation eased from a high of 6.5 per cent in July.

    Beijing has promised to ease lending curbs to help companies that have been battered by a slump in global demand.

    Analysts expect economic growth that has declined steadily over the past year to fall to a new low of about 8 per cent for the three months ending in March, down from 8.9 per cent in the final quarter of 2011.

    Forecasters had expected a temporary acceleration in inflation in March but it should moderate in coming months and come in under the official target for the full year.

    The World Bank and International Monetary Fund have warned China and other developing countries to prepare for a possible global slowdown this year.

    Chinese leaders tightened lending and investment curbs repeatedly in 2009 and 2010 to cool inflation and guide growth to a more sustainable level.

    They reversed course after a sharp fall in export demand.

    The government has yet to announce major changes, but financial analysts say regulators are quietly easing access to credit. Analysts expect Beijing to lower interest rates or make more money available for lending by lowering the minimum level of reserves banks are required to hold.

    SOURCE: Agencies


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