China consumer inflation accelerates faster than expected but producer prices fall again

People buy food on a market in Beijing, on Feb 18, 2016.
People buy food on a market in Beijing, on Feb 18, 2016. PHOTO: AFP

BEIJING (REUTERS) - China's consumer inflation accelerated faster-than-expected in February due to rising food prices but another fall in upstream prices is likely to add to concerns about growing deflationary pressures, which could trigger further policy easing.

Annual consumer inflation edged up to 2.3 per cent in February, the National Bureau of Statistics said on Thursday, from January's 1.8 per cent and above the 1.9 per cent predicted by analysts.

That was the fastest increase pace since July 2014.

A seasonal jump in food prices drove February's inflation, with food prices climbing 7.3 per cent and non-food inflation up 1.0 per cent.

China aims to keep consumer inflation at around 3 per cent in 2016 to reflect factors such as rising labour cost, price fluctuations of agricultural products and the impact of further price reform.

"A target of higher price increases will be conducive to reducing expectations of deflation," the National Development and Reform Commission (NDRC), the country's top economic planner, said in a work report on Saturday.

China's consumer price index rose 1.4 per cent in 2015 from a year ago, far short of Beijing's 3 per cent target for 2015.

Reflecting sluggish demand at home and overseas and overcapacity in key sectors, China's producer prices remained stubbornly weak, with the producer price index sliding 4.9 per cent in February from a year ago.

Premier Li Keqiang acknowledged in parliament on Saturday that leaders face "a tough battle" to keep the economy growing by at least 6.5 per cent over the next five years, while pushing hard to create more jobs and restructuring state-owned enterprises.

China's trade data released on Tuesday also showed entrenched weakness in the economy as exports tumbled at their fastest pace in more than over six years and imports fell for 16th straight month.

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