Chinese inflation touches record high

BEIJING - Agence FRance-Presse

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. REUTERS photo

Chinese inflation hit a 10-month high in February while growth in industrial production and retail sales slowed, official data showed on March 9, complicating policymakers’ efforts to boost recovery.

Growth in the world’s second-largest economy slowed to a 13-year low of 7.8 percent in 2012, though a pick-up in the final three months had raised hopes for a rebound this year.

The consumer price index - a main gauge of inflation - rose 3.2 percent year-on-year in February, according to the National Bureau of Statistics (NBS), as holiday season spending and rapid credit growth accelerated price rises.

The figure was a spike from January’s 2.0 percent and the highest result since April 2012, when it stood at 3.4 percent.

Inflation is a key issue for the ruling Communist Party as it brings with it the risk of popular discontent over rising prices and the threat of social unrest.

Other indicators announced March 9 by the NBS provided further signs that a budding recovery may be fragile.

Industrial output, which reflects production at China’s factories, workshops and mines, rose 9.9 percent year-on-year over the first two months of 2013, compared with 11.4 percent in the same period of 2012.Retail sales - the main gauge of consumer spending - were up 12.3 percent over the period, slowing from 14.7 percent in the January-February period of last year.

Giving the figures for the two-month period minimised distorted comparisons due to the Lunar New Year, which fell last month this year but in January for 2012.

Outgoing Chinese Premier Wen Jiabao on March 5 announced an economic growth target of 7.5 percent for 2013 - the same as last year’s - and reiterated the government’s vow to retool the economy away from investment-led growth.

Wen also said that the 2013 inflation target was set at 3.5 percent, lower than last year’s goal of 4.0 percent, but higher than the actual inflation rate for 2012, which came in at 2.6 percent.