CHINA S inflation and industrial production exceeded forecasts in February, underscoring the challenge for the government as it seeks to prevent price increases from stirring social unrest.
Consumer prices rose at an annual 4.9 percent pace in February and output increased 14 percent in the first two months of 2011, the statistics bureau said Friday in Beijing. Producer prices jumped 7.2 percent last month, the most since September 2008.
Friday s reports signaled the central bank s monetary tightening has been insufficient so far to contain prices, in an echo of pressures across Asia that spurred South Korea, Thailand and Vietnam to raise interest rates last week. People s Bank of China (PBOC) Governor Zhou Xiaochuan said Friday interest rates will be used to curb inflation, and played down the role of currency gains, which U.S. officials have encouraged China to use.
Inflation risk is very high as oil prices and food costs are rising, and wages have increased substantially, said Shen Jianguang, a Hong Kong-based economist at Mizuho Securities Asia Ltd. A PBOC rate increase as early as this month can t be ruled out, said Shen, who formerly worked at the International Monetary Fund and the European Central Bank.
Friday s economic data contrast with diminishing inflation pressures indicated Thursday in China s monthly trade report, which showed an unexpected deficit of US$7.3 billion in February. The excess of imports over exports helped channel money out of an economy awash with cash after a record 17.5 trillion yuan (US$2.7 trillion) of lending over 2009 and 2010.
The pace of China s inflation was unchanged from January and compared with the 4.8 percent median forecast in a Bloomberg News survey of 22 economists. The government aims to limit full-year consumer-price gains to about 4 percent.
Fixed-asset investment grew 25 percent in the first two months of 2011 from a year earlier, the data showed. Retail sales rose a less-than-forecast 16 percent in January and February combined. Industrial output rose 15 percent last month from a year earlier.
China s economic figures are distorted in the first two months of each year by a weeklong holiday to celebrate the Lunar New Year, the dates of which shift. The customs bureau Thursday cited the event as a factor in the February trade deficit, which was the widest in seven years.
(SD-Agencies)
