China's inflation eased slightly in April as repeated interest rate hikes and other controls began to cool an overheated economy.
Consumer prices rose 5.3 percent over a year earlier, driven by an 11.5 percent jump in food costs, data showed Wednesday. That was down from March's 32-month high of 5.4 percent but exceeded private sector forecasts and the government's 4 percent target for the year.
"Inflation has taken a bit of a step back in April but that doesn't signal the end of China's problems," said IHS Global Insight analyst Alistair Thornton.
The data came amid signs official efforts to steer economic growth that hit 9.7 percent in the first quarter to a more sustainable level might finally be taking effect. Earlier economic indicators showed April growth in imports and manufacturing both slowed.
Stubbornly high inflation has frustrated Chinese leaders who have tried to reassure the public by declaring taming prices their priority. Beijing has hiked interest rates four times since October and ordered companies to hold down prices, but inflation is expected to stay high in coming months.
The government says it will allow a faster rise in China's tightly controlled currency to cool prices by making oil and other imports cheaper. But analysts say any rise is likely to be too small to satisfy Washington and other critics who say an undervalued yuan swells China's trade surplus and hurts foreign companies.
Analysts blame the inflation on the dual pressures of rising consumer demand that is outstripping food supplies and a bank lending boom that was part of Beijing's response to the 2008 global crisis.
Inflation is politically dangerous for the Communist Party because it erodes economic gains that underpin the party's claim to power.
In mid-April, a rise in state-set fuel costs prompted a three-day protest in Shanghai by hundreds of truck drivers, disrupting cargo shipments in China's busiest port city.
Prices of farm goods eased in April and China's main index of manufacturing activity declined.
The manufacturing figures "suggest that the Chinese economy is stabilizing to a more moderate pace of growth, and that the government's suite of policies to combat inflation is likely taking effect," said Jing Ulrich, JP Morgan's chairwoman of Global Markets for China, in a report.
Still, analysts noted nonfood inflation crept up to 2.7 percent in April, the highest level since such data were first released seven years ago.
Price pressures "remain uncomfortably high," said a report by Matthew Circosta of Moody's Analytics.
"The government's tightening efforts are starting to slow inflation, but only ever so slightly," Circosta said.
The World Bank is forecasting full-year economic growth of 9.3 percent and inflation of 5 percent, above the government's target of 4 percent.
In a sign of a slowing economy, growth in China's industrial output eased in April, declining from March's 14.8 percent to a still-robust 13.4 percent, the National Bureau of Statistics reported.
The government reported Tuesday that import growth slumped to 21.8 percent from March's rapid 32.6 percent. That reflected weaker demand for iron ore and other goods as government curbs reduced investment and construction.
Producer price inflation fell from March's 7.3 percent to 6.8 percent, still suggesting retailers will face pressure to pass on higher costs to consumers. Growth in retail sales declined to 17.1 percent from March's 17.4 percent.
Food price inflation is especially sensitive in a society where poor families spend up to half their incomes to eat. Beijing is paying food subsidies to the poorest households and has told local leaders to assure adequate vegetable supplies in markets.
Last week, in an apparent warning to companies to hold down prices, consumer goods maker Unilever was fined 2 million yuan ($308,000) for talking to Chinese media about planned price hikes for soap. The government complained that disrupted "market order" and efforts to squelch expectations of further rises.
Premier Wen Jiabao, China's top economic official, said last month Beijing would "increase the flexibility of the yuan's exchange rate" to ease price pressures, though he gave no target level.
The yuan, also known as the renminbi or people's money, has risen by about 5 percent against the U.S. dollar since Beijing promised greater flexibility last June.
Some commentators suggest inflation will force China's exporters to demand higher prices from customers in the United States, Europe and elsewhere. But analysts say they have yet to see that impact.
"There has been no direct pass-through from inflation in China to the price paid by importers of Chinese goods, a sign that Chinese firms are still able to absorb rising costs," said Mark Williams of Capital Economics in a report this week.
National Bureau of Statistics: http://www.stats.gov.cn