China inflation picks up pace

Date: Thursday 11 Mar 2010

Consumer price inflation (CPI) accelerated rapidly in China in February, fuelling speculation that the government will call ease stimulus measures.

CPI rose to 2.7% in February, a 16-month high and sharply higher than the rate of 1.5% seen in January.

Analysts had been expecting a figure of about 2.3%.

The rise in the rate of inflation may have been due in part to the timing of Chinese New Year, which fell in February this year.

However, some economists still expect the higher inflation rate to increase pressure on China’s central bank to increase interest rates.

‘Our forecast is that a rate hike should happen relatively soon, if not this month then probably early in the second quarter,’ said Tao Wang, an economist at UBS.

However, the National Bureau of Statistics (NBS), said the increase was in line with China’s inflation target of 3%.

‘We believe this year's price rises will be mild and controllable so we have to stabilise inflationary expectations,’ said NBS spokesman Sheng Laiyun.

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