BEIJING: China said on Friday prices rose 4.9 percent year-on-year in February, well above the official target, despite government efforts to rein in inflation. Rising costs of food, housing and other essentials have become a major source of anxiety for consumers and stability-obsessed policymakers, who are ever fearful that prolonged inflation could spark social unrest. The consumer price index, the key gauge of inflation in the world's second-largest economy, was unchanged from January when it rose 4.9 percent, again surpassing the government's annual inflation target of four percent. Analysts had expected inflation to rise 4.8 percent due to lower vegetable prices and much-needed snowfalls across drought-stricken northern China, according to Dow Jones Newswires. The National Bureau of Statistics last month tweaked the key inflation gauge by reducing the weighting of food prices while increasing the weight for rents and other housing costs. The country's producer price index, which measures the cost of products at the factory gate, rose 7.2 percent year-on-year in February compared with a rise of 6.6 percent in January, as global commodity prices soared. Last week, Premier Wen Jiabao said in his speech to open the annual session of parliament that reining in prices was the government's "top priority" in 2011, as the country strives for a more balanced eight percent growth rate.
"Recent prices have risen fairly quickly and inflation expectations have increased," Wen said in his "state of the nation" address.
"This problem concerns the people's well-being, bears on overall interests and affects social stability. We must therefore make it our top priority in macroeconomic control to keep overall price levels stable." Urban fixed asset investment, a measure of government spending on infrastructure, rose 24.9 percent in the January-February period, as compared with a year ago. Retail sales rose 15.8 percent in the two-month period.
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