CHINA is on track to meet its inflation target this year, with the latest figures showing that the retail price index rose 11.4 per cent last month from a year ago. The figure represented a drop of 0.9 percentage point from August's rise of 12.3 per cent, according to the State Statistical Bureau. Economists said the government's policies of controlling prices and fixed asset investment, and tightening credit were working. They cautioned that the figure could be a result of camouflaging by regional governments under pressure to report success on curbing inflation. Peregrine Brokerage economist Ma Guonan said all indicators, including industrial output, trade surplus and fixed-asset investment, showed the economy was cooling down and inflation was continuing its steady decline. The government's decision to ease credit controls to some large and efficient enterprises in some preferred sectors did not represent a shift in its policy and would not lead to a much higher inflation rate, he said. Inflation in the first nine months of the year was 16.6 per cent, close to the government's target of 15 per cent for the year, compared with last year's 21.7 per cent. WI Carr economist Joe Zhang said: 'In the past few months, the government has been trying hard to maintain price controls through administrative measures. It seems that it may partially meet its target.' He warned the government against the danger of being too obsessed with keeping a rein on inflation. 'I think [the macroeconomic control] is overdone because of pressure from foreigners, including the International Monetary Fund and the World Bank. 'Bringing inflation down is a good thing but when achieving inflation control means a very huge price to pay, it makes one wonder whether the price is worth paying.' Mr Zhang said he was concerned inflation was being brought down too rapidly. 'The government is so heavy-handed in its credit control that it is damaging productive sectors,' he said. The bureau earlier reported that debt among enterprises rose by more than 120 billion yuan (about HK$111.52 billion) from the start of the year, aggravated by the tight monetary policy and the shortage of capital. The assistant chief economist at the Hong Kong Trade Development Council, David Wong, said a jump in spending could be expected in the last quarter of the year as companies rushed to spend unused funds earmarked for projects. He said he was confident this would not significantly push up inflation because the government was maintaining a tight grip on credit. The major determinant in the inflation rate was the government's determination to keep macroeconomic controls in place, Mr Wong said. 'The prospect for reaching the target set earlier in the year is reasonably promising in view of recent policy implied by the Ninth Five-Year Plan, which stipulated that inflation control had to be continued. 'If inflation can be kept to the government target this year, the prospect of credit loosening next year will be brightened.' He said there was a possibility the government could ease some credit controls as the end of the year approached. He said Beijing was under pressure from cash-strapped state-owned industries. People's Bank of China governor Dai Xianglong said on Tuesday the goal of keeping inflation below 15 per cent would probably be attained. He said inflation controls would still be a priority and monetary policy had to be rigidly enforced to bring prices down. The government aims to bring inflation down to 10 per cent next year and seven per cent the year after. Prices in the 35 largest cities rose 10.4 per cent last month and 14.1 per cent for the first nine months. Beijing saw a jump of 12 per cent compared with 9.1 per cent in Shanghai and 8.2 per cent in Guangzhou. Haikou, capital of Hainan Island, posted an increase of 5.2 per cent. The highest rate was in Xining, capital of the under-developed western province of Qinghai, where inflation rose 14.8 per cent. It was followed by 14.6 per cent for Kunming, capital of Yunnan - another under-developed province in the southwest.