Cold winter pushes up mainland inflation

Inflation on the mainland rose last month for the second consecutive month amid the coldest winter in nearly three decades, although economists believe prices will remain under control in the near term.

Following the release of the inflation data yesterday, the People's Bank of China pledged to continue with its prudent monetary policy, prevent financial risks and keep consumer prices "basically stable".

The comment suggests the central bank may tread carefully in balancing its goals between supporting the economy and curbing inflation through what it called "steady and moderate growth" in credit supply.

The consumer price index rose 2.5 per cent in December from a year earlier, bringing the full-year inflation to 2.6 per cent, the National Bureau of Statistics said. The reading last month accelerated from the 2 per cent rate in November and was above market expectation for a 2.3 per cent rise.

The higher-than-expected inflation came after vegetable prices soared 17.5 per cent from November due to the cold weather and difficult transport.

Meanwhile, Zhang Xiaoqiang, a vice-chairman of the National Development and Reform Commission, said the economy probably grew 7.7 per cent last year and was likely to expand 7.5 per cent this year, Xinhua reported. He said inflation might rise to 3.5 per cent this year.

Economists say inflation remains manageable.