Apr 20, 2014, 7:03 am (BST)
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Chinese inflation rate rises to 3.6 pct in March
BEIJING, April 9 (BSS/AFP) - China's inflation rate edged up in March from the previous month, official data showed today, but analysts said they expect it to continue its downward trend.

The consumer price index (CPI) rose to 3.6 percent in March
from 3.2 percent in February, slightly higher than analysts'
expectations, as bad weather pushed up food prices and
authorities raised the price of fuel.

Inflation -- one of China's biggest economic concerns
because of the potential for rising prices to trigger social
unrest -- hit a high of 6.5 percent last July, but has gradually
slowed since.

"CPI was mainly pushed up by food prices, which resulted
from an undersupply of vegetables due to relatively cold weather
in March," Li Huiyong, a Shanghai-based analyst at Shenyin Wanguo
Securities, told AFP.

Food prices, regularly the source of government concern as
they hit China's most sensitive populations, rose 7.5 percent in

The government's move to hike fuel prices twice since the
start of this year also contributed to rising costs, but Li said
the overall "downward trend" of China's inflation rate was likely
to continue.

"We think the downward trend will likely be unchanged, with
the CPI bottoming out in July this year," he said.

Inflation hit its lowest rate since 2010 in February and
analysts expect it to remain under four percent this year,
despite this month's price rises.

Premier Wen Jiabao, speaking at the opening of the annual
session of parliament in March, warned consumer prices remained
high and said the government's aim was to keep inflation within
four percent this year.

As China's growth has shown signs of slowing, the government
has been keen to loosen credit conditions to boost exporters and
small and medium-sized enterprises hit by the global economic

Beijing has twice lowered the banks' reserve requirement
ratio in the past four months, effectively increasing the amount
of money they can lend, and analysts said they expect further
such moves in the coming months.

"There's still room for the central bank to lower reserve
ratio requirements soon," said Tang Jianwei, an economist with
the Bank of Communications, based in Shanghai.

The producer price index, which measures the cost of goods
at the farm and factory gate and is a leading indicator of
consumer prices, fell 0.3 percent year-on-year in March.

China has cut its economic growth target to 7.5 percent this
year from eight percent last year, in an official acknowledgement
that the export-driven economy is slowing as Europe's debt crisis
and sluggish US economic recovery hurts demand for its products.
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