China's inflation edged up in March as Beijing shifted from containing price rises to shoring up flagging growth in the world's second-largest economy.
Consumer prices rose 3.6 percent over a year earlier, up from February's 3.2 percent 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 percent rise in politically sensitive food costs, up from the previous month's 6.2 percent but well below last year's double-digit rates.
"It suggests inflation momentum is under control, or subdued, and there is nothing for them to do," said Tim Condon, Asia economist for ING Financial Markets. "They must be pretty content with these numbers."
Beijing shifted focus from cooling prices to shoring up economic growth in December after inflation eased from a high of 6.5 percent 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 percent for the three months ending in March, down from 8.9 percent in the final quarter of 2011. Official data are due to be reported this week.
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.
China's economic data often are clouded by the Lunar New Year holiday, which falls in either January or February and prompts many companies to close for a week or more. Trade and price data can be thrown off as factories rush to fill orders before the closure and then go on a buying binge to restock raw materials following the break.
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.
National Bureau of Statistics (in Chinese): http://www.stats.gov.cn