Chinese inflation accelerates to 2.3%

China's inflation accelerated to 2.3% in February, driven by a jump in food prices, but stayed below the government's official target for the year.

The consumer price rise reported on Thursday was up from January's 1.8%. Food prices surged 7.3%, up from the previous month's gain of 4.1%.

Inflation is forecast to edge higher this year, though analysts say it is unlikely to reach levels that would hamper plans by Chinese leaders to boost government spending to shore up slowing economic growth.

The government last weekend set this year's official inflation target at 3%.

"The jump in food inflation last month was seasonal and will prove short-lived," Julian Evans-Pritchard of Capital Economics said in a report, adding, "Price pressures elsewhere are likely to pick up in coming quarters but should stop short of becoming a constraint on further policy easing."

 

Producer prices, which have fallen for more than three years, dropped 4.9% in February from a year earlier, a slight improvement over the previous month's decline of 5.3%.

Producer prices, measured as goods leave the factory, have been depressed by a glut of excess production capacity industries including steel, coal, cement and aluminium as well as lower global commodity prices. That has forced some companies into bankruptcy and prompted steel producers to export their surplus, irking China's trading partners.

The government is in the midst of a campaign to shrink its steel and coal industries and says other fields will be targeted as well.