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CPI jumps higher than predictions

04-10-2012 13:25 BJT

Inflation rate hits 3.6% in March as further easing policies under review

Inflation, driven by food and energy prices, hit a higher-than-expected 3.6 percent in March renewing concerns about inflationary pressures in the coming months.

The latest figure may see the government adopt a more cautious stance on monetary loosening and stimulus measures despite cooling economic growth, analysts said. The government's inflation target for the year is 4 percent.

The year-on-year consumer price index, a key inflation indicator, edged up last month by 0.4 percentage points more than in February, according to data released by the National Bureau of Statistics on Monday.

Food prices helped drive inflation as they account for about one-third of the weighting in the CPI calculation. They increased 7.5 percent last month from a year earlier. In February they increased 6.2 percent year-on-year.

Vegetable prices surged by 20.5 percent year-on-year, 14 percentage points higher than February's figure, according to the NBS.

Statistics from the Ministry of Commerce suggested that wholesale prices of 18 major vegetables rose for four consecutive weeks from February, posting an increase of 9.7 percent by early March.

Inflation hit a high of 6.5 percent in July, but has gradually fallen since then and another key gauge also released on Monday, measuring producer prices, fell. This could herald an easing of inflationary pressure, analysts said.

"Increasing labor costs as well as rising wages among traditionally low-income groups in cities have boosted the consumption of basic foods which might see price increases in other daily necessities," said Li Xunlei, chief economist with Haitong Securities Co Ltd in Shanghai.


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