Inflation on the mainland unexpectedly accelerated last month as consumer spending jumped to a three-month high during the week-long Lunar New Year holidays, limiting scope for monetary easing.
The consumer price index (CPI), a key gauge of inflation, rose 4.5 per cent year-on-year in January, the National Bureau of Statistics said yesterday. The rate outstripped economists' forecast of a 4 per cent rise, and came after a 4.1 per cent rise in December and a 4.2 per cent rise in November.
Despite the upward blip, which interrupted a series of figures suggesting that inflation was in retreat after hitting a 37-month high of 6.5 per cent in July, economists said the underlying trend in 2012 was still downwards.
Ting Lu, a China economist at Bank of America-Merrill Lynch, said the rise was a one-off and only temporary.
He said the this year's Lunar New Year festival came nearly a week earlier than it did last year, affecting the year-on-year comparison base. The holiday ran from January 22 to January 28 this year.
'Investors definitely should not read too much into the inflation [figures],' Lu said. Merrill Lynch expected China's CPI inflation rate to drop to around 3.3 per cent in February, he said.
Yu Song, a China economist with Goldman Sachs, said the data would probably set off alarm bells among some policymakers but it would not necessarily cause a change in policy.