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China's CPI rises by 1.2 percent

China's consumer price index (CPI) rose 1.2 percent last month as the cost of food ticked higher, official data showed yesterday as analysts said the figures show inflation remains tame and no threat.

The rise compared with a year-on-year gain of 0.9 percent in September, the National Bureau of Statistics (NBS) said in a statement.

Analysts said the slight uptick was expected and did not represent a major change in trend in the near term.

"It's not a big surprise and the pick up is mainly due to a higher comparative base from last year," said Ma Jun, an economist at Deutsche Bank in Hong Kong.

"It does not change our outlook," he added, saying that he expects inflation this year of around 2 percent.

China's CPI rose 1.9 percent year-on-year in the 10 months to last month, while in the first nine months of the year it was up 2 percent.

The country's main inflation barometer showed an overall rise in food prices of 1.3 percent, although vegetable prices alone climbed 17.5 percent.

While food prices were in part responsible for inflation that hit monthly highs of 5.3 percent last year, government fears that inflation could spiral out of control has led to stringent credit-cooling measures.

Those measures, coupled with massive over-investment, have sparked concerns that China could now be facing deflation but analysts said an ad hoc price liberalization scheme for commodities such as water, gas and energy will shore-up inflation at around 2 percent next year.

Last week central bank chief Zhou Xiaochuan (周小川) said prices remained generally low and bank deposit rates would be maintained at their current low levels to stimulate domestic consumption.

The central government is keen to see consumer demand play a greater role in driving economic growth.
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