China's inflation cools in Feb, paving way for easing
China's consumer price growth slowed to 3.2 percent in February amid economic slowdown, setting the stage for policymakers to unveil more pro-growth policies in the next few months.
The rise in the Consumer Price Index last month was below an annual inflation target of 4 percent announced by Premier Wen Jiabao this week. It compared with 4.5 percent in January, according to the National Bureau of Statistics.
Although data in the last two months may have been distorted by the timing of the Spring Festival holiday, which fell in January this year but in February of 2011, analysts believe that the downward trend is clear.
"Apparently, inflation is cooling," said Liu Yu, an Orient Securities Co trader. "We will see a wider range of selective loosening in the near future, such as tax cuts and credit offered to smaller firms as well as reductions in banks' reserve requirement."
The Producer Price Index, which tracks factory-gate inflation, was unchanged in February from a year earlier, the top statistics bureau said. The indicator rose 0.7 percent year on year in January.
Premier Wen said in his work report that the 4-percent inflation target has taken into account risks from imported inflation and increasing costs of land, labor and capital. He noted that when setting the goal, the government has already left room to alter the way prices of resources including electricity and oil are set.
Controlling "excessive rises" in food prices will remain a priority this year, Wen said. The government will take measures to boost production and reduce transport and distribution costs, he said.