The Korea Herald


China inflation rate at 4.9% in February

By 이현주

Published : March 11, 2011 - 19:57

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China’s consumer prices rose 4.9 percent in February from a year earlier, exceeding the government’s 2011 target for a fifth month.

The advance was more than the 4.8 percent median forecast in a Bloomberg News survey of 22 economists. In January, the rise was 4.9 percent. The government has a 4 percent inflation target for the full year.

Investors are concerned that monetary tightening to tame inflation may slow the Chinese economy, weakening a global expansion already hampered by elevated unemployment in the U.S. and sovereign debt woes in Europe. Stocks tumbled globally Thursday as the Asian nation reported weaker exports, U.S. jobless claims rose and Moody’s Investors Service cut Spain’s debt rating.

“Inflation and overheating are still a bigger risk in China than a sharp economic slowdown,” Yao Wei, a Hong Kong- based economist with Societe Generale SA said before Friday’s release. “The economy has strong momentum.”

China’s economic data is distorted in the first two months of each year by a weeklong holiday to celebrate the Lunar New Year. The customs bureau Thursday cited the event as a factor in an unexpected $7.3 billion trade deficit for February, the nation’s biggest in seven years.

Premier Wen Jiabao’s campaign to cool real-estate and consumer prices after the economy surged back from the financial crisis has included three interest-rate increases since mid- October. Producer prices rose 7.2 percent in February after a 6.6 percent gain in the previous month, Friday’s report showed.

Fixed-asset investment grew 24.9 percent in the first two months of 2011 from a year earlier, the data showed. Retail sales rose 15.8 percent in January and February combined and industrial production gained 14.1 percent.

A decline in vegetable prices after the Lunar New Year holiday may have trimmed the inflation number for last month. Inflation may rebound to 5 percent in March, according to Bank of America-Merrill Lynch.

Wen told lawmakers March 5 that taming inflation is the nation’s top economic priority for this year. Besides raising rates, the government has ordered banks to set aside more money as reserves.