China's CPI rises 4.9% in Feb.
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China's consumer price index (CPI), a main gauge of inflation, rose 4.9 percent year on year in February, the National Bureau of Statistics (NBS) announced Friday.
The increase was the same as January's.
China's January inflation figure remained stubbornly high at 4.9 percent despite a series of measures taken to curb price rises. The growth accelerated from 4.6 percent in December but was lower than the 28-month high of 5.1 percent in November.
NBS spokesman Sheng Laiyun said food prices, which account for nearly a third of the basket of goods in the nation's CPI calculation, surged 11 percent year on year in February. Non-food prices rose 2.3 percent from a year earlier.
China has adjusted the weight of items in its CPI calculation from the start of the year -- with the food weighting pushed down 2.21 percentage points and property-related weighting up 4.22 percentage points.
Consumer prices rose 4.8 percent in urban areas and 5.5 percent in the rural region, compared with a year earlier, said Sheng.
The February CPI was higher than market forecasts of 4.8 percent and above the government's target of 4 percent for this year.
Sheng attributed the increase to price hikes during the Spring Festival holiday and seasonal factors.
He said the upward trend may continue as quantitative easing by some countries has resulted in higher commodity prices. Meanwhile, rising costs of domestic labor and raw materials could hardly be reversed in the short run.
But the government is confident of curbing inflation as abundant grain reserves, the oversupply of industrial products and the country's prudent monetary policy will help, he added.
The producer price index (PPI), a major measure of inflation at the wholesale level, rose 7.2 percent in February from a year earlier, the highest level since October 2008.
"Inflation pressure remains high and the sharp rise of producer prices will in turn push up consumer prices in the near future," said Li-Gang Liu, head of Greater China Economics, ANZ Banking Group.
China is facing imported inflation pressure from rises in global commodity prices, including crude oil, metallic ores, and even food, Sheng said.
In February, the producer purchase price climbed 10.4 percent year on year, with purchase prices of non-ferrous metal, fuel and ferrous metal up 14.8 percent, 8.9 percent and 15.8 percent from a year ago, according to the NBS.
Analysts estimate the country's inflation will probably peak in May or June this year. "It remains uncertain whether the inflation will drop sharply in the second half of the year considering the imported inflation," said Chen Ying, analyst with Sealand Securities.
On Thursday, the General Administration of Customs said the country recorded a trade deficit of 7.3 billion U.S. dollars in February as the Spring Festival, or the Lunar New Year holiday season dented exports.
That was China's second monthly trade deficit in a year, after the country announced a deficit of 7.24 billion U.S. dollars in March 2010, which was, at that time, the first time in six years.
Market observers said the sudden deficit was linked to a rising yuan, instabilities in external markets, and rising labor costs.
The Chinese government has pledged to tame consumer prices in an effort to ensure social stability in the world's most populous country and second largest economy.
Premier Wen Jiabao has reaffirmed that China will continue to implement a proactive fiscal policy and prudent monetary policy in 2011.
The People's Bank of China (PBOC), the central bank, has boosted the reserve requirement ratio for commercial banks eight times since the beginning of 2010 and raised interest rates three times to rein in inflation.
"There will be an interest rate increase in March. The authorities should consider other methods to absorb liquidity rather than simply resort to monetary policies," said Pan Xiangdong, chief economist at Everbright Securities.
