China February CPI up 3.2 percent on year as food prices jump

Fri Mar 8, 2013 10:40pm EST
 
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BEIJING (Reuters) - China's annual inflation jumped to a 10-month high in February as holiday spending for the Lunar New Year drove food prices sharply higher, data from the National Bureau of Statistics (NBS) showed on Saturday.

China's consumer price index rose 3.2 percent in February versus a year ago, ahead of market expectations in the benchmark Reuters poll of a rise of 3.0 percent, with food prices leaping 6.0 percent on a year ago - a nine-month high.

The month-on-month rise in CPI was also ahead of consensus, with the 1.1 percent increase the strongest monthly gain since January 2012's rise of 1.5 percent. Economists polled by Reuters had expected a 0.8 percent rise.

The sharp rise in food prices underlined that seasonal distortions caused by the timing of Lunar New Year festivities - which were in February this year and in January in 2012 - were key drivers of the headline annual rise in prices.

"Going into March, with the Lunar New Year impact fading and weather turning better, all conditions become favorable for food production and transportation and March CPI is expected to ease from February," Yu Qiumei, a senior NBS statistician, said in a statement accompanying the data.

Policymakers are already braced for higher prices this year versus last. Inflation is likely to hit 3.5 percent in 2013, according to targets announced at the opening of China's annual legislative meeting on Tuesday. Inflation in 2012 was 2.6 percent.

The 2013 projection, however, is 50 basis points below the 4 percent inflation that had been factored into the government's 2012 economic forecasts, suggesting that inflation is seen to be relatively well-contained - either by existing policy settings or the relative slackness in the world's second-biggest economy.

China's GDP grew at its slowest rate in 13 years in 2012.

ECONOMY STABILISING   Continued...

 
Customers shop at a supermarket in Shanghai March 8, 2013. China's annual consumer inflation quickened to 3.2 percent in February from January's 2.0 percent, data showed on Saturday in a further sign that China's burgeoning recovery could be stoking price pressures. Picture taken March 8, 2013. REUTERS/Aly Song