World and Nation

Food prices push rate of inflation up in China

HONG KONG — The China inflation rate edged up in March, data released Monday showed, in a development that may dampen, but not eliminate, the chances of Beijing’s announcing added steps to prop up the flagging pace of growth.

Consumer prices in the Chinese economy rose 3.6 percent in March, compared with the rate of a year earlier, driven by a spike in the volatile prices for food.

The increase was well above the February rate of 3.2 percent and was nearer the government’s official target of four percent than analysts had expected.

Unlike the situation in Europe and the United States, where growth is anemic and inflation subdued, China and other emerging economies have been seeing significant inflation as robust growth and rising costs for raw materials have pushed prices up.

In China, where millions struggle to make ends meet and where food makes up a large chunk of household spending, inflation is a particularly sensitive topic. Sharp rises in the prices of consumer goods and housing last year catapulted inflation to the top of Beijing’s list of economic worries and prompted the authorities to announce a series of steps designed to reduce growth and the inflation that accompanied it.

The current levels of inflation are likely to persist in coming months, analysts said Monday, citing fuel price increases and, eventually, a likely reacceleration in the overall economy.

At the same time, however, inflation now is well below the worrying levels of last year — it hit 6.5 percent in July — and remains comfortably below the government’s target.

Even the slightly higher-than-expected rate recorded for March leaves the authorities with plenty of leeway to step on the economic gas pedal, if needed, analysts said.

The headline consumer price index “is still moderate and manageable,” Qu Hongbin, co-head of Asian economics research at HSBC in Hong Kong, said in a research note. Supply constraints caused by extreme weather conditions appear to have caused price spikes for some foods, like spring onion and cabbage — one-time effects that will not have a lasting effect on overall food prices, he added.

Growth, rather than inflation, is “the main economic concern for Beijing policymakers,” Qu said.

Growth has softened markedly in the past few months as the tightening measures taken by the government last year have dampened domestic activity.

European debt troubles have also helped slow growth by reducing demand for Chinese-made goods.

This combination has prompted several economy-bolstering announcements by Beijing in the past few months, notably a reduction in reserve requirement ratios for banks, a step that effectively opens the door to more lending.

The economic data for March will be closely watched for signs of how resilient the economy has been in the face of the European turmoil and for any indications of possible further policy action by Beijing.