The consumer price index in March rose 8.3 per cent from a year earlier, slower than February's rise of 8.7 per cent, but higher than Beijing's target of 4.8 per cent for this year.

Economists said while mainland growth had eased slightly it still beat economists' forecasts and increased the likelihood Beijing would continue to raise interest rates and tighten lending. The mainland economy is showing remarkable resilience despite the unravelling subprime crisis in the US and damaging blizzards at home, the worst in 50 years, which came at Lunar New Year.

The overall economic situation was better than expected, Xinhua reported last night, quoting a State Council statement following a meeting chaired by Premier Wen Jiabao .

Curbing inflation would remain the top priority, it said.

The People's Bank of China ordered commercial banks to put aside more money as reserves, raising the so-called reserve requirement by 50 basis points, limiting lenders' access to cash. It is the third time this year the ratio has been increased.

Share prices in Hong Kong and on the mainland closed lower after data triggered concerns of policy tightening to curb rising inflation.

'China has maintained steady, rapid growth so far this year, despite the worst winter here in half a century and the spreading global credit crisis,' National Bureau of Statistics spokesman Li Xiaochao said.

Mr Li said curbing inflation remained the government's top concern and its policy priority, and added that the risk of inflation spreading from food to other areas of the economy was rising. He said if Beijing wanted to achieve its target of keeping inflation below 4.8 per cent this year, it must keep the consumer price index under 4.2 per cent for the rest of the year.

However, economists warned price pressures were building up, with annual factory-gate inflation leaping to 8 per cent year on year in March from 6.6 per cent in February.

'It is crucial to maintain the tightening policy stance to anchor rising inflation expectations,' Liang Hong and Yu Song of Goldman Sachs said in a note to clients. 'It is still too early for the government to claim victory for their inflation battle.'

Retail sales grew 20.6 per cent year on year in the first quarter and 21.5 per cent in March. After adjusting for higher inflation in the period, retail sales gained 12.3 per cent in real terms, similar to that in 2007.

Urban fixed asset investment accelerated to 25.9 per cent in March, from 24.3 per cent in January-February. But industrial production rose 16.4 per cent year on year in the first quarter, a 1.9 percentage-point slowdown from last year. Mr Li said the government must balance its policies carefully, as a sharp slowdown and a rebound in economic growth were both possible.