BUSINESS

China's April inflation rises to 2.4 per cent amid concern about strength of recovery

05/08/2013 09:52 EDT | Updated 07/08/2013 05:12 EDT
BEIJING, China - China's inflation rose slightly in April amid concern about the strength of its economic recovery.

Consumer prices rose 2.4 per cent over a year earlier, up from March's 2.1 per cent gain, data showed Thursday. That still is well below the government's target of 3.5 per cent for the year.

Inflation is forecast to rise gradually as a shaky economic recovery boosts consumer demand. But mixed signals about factory activity, which slowed in April, and doubts about the strength of trade have raised questions about whether the recovery is gaining traction.

The world's second-largest economy is limping out of its deepest slump since the 2008 global crisis. Growth unexpectedly declined to 7.7 per cent in the first three months of this year from 7.9 per cent the previous quarter. Analysts say the economy is being shored up by state-led investment and bank lending and could be vulnerable if trade or investment weakens.

Government data showed April trade growth accelerating but analysts said export figures might be inflated and the recovery might be weaker than it looks.

The government's growth target for the year is 7.5 per cent, above Western levels but well below China's double-digit rates of the past decade.

The weak first-quarter figures prompted the World Bank and private sector forecasters to cut full-year growth outlooks, though to still-robust levels of about 8 per cent.

April's price rise was driven by a 4 per cent gain in food costs, up from March's 2.7 per cent rate. Food prices are especially sensitive in a society where families spend one-third to half their incomes to eat.

Wholesale prices fell 2.6 per cent from a year earlier, accelerating from March's 1.9 per cent decline.

Some analysts say inflation might be restrained due to the impact of orders by President Xi Jinping to Communist Party officials to cut spending on banquets and other frills to mollify public anger about corruption.

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National Bureau of Statistics: www.stats.gov.cn