China's inflation eases to 5.3 percent in April

Updated: 2011-05-11 11:51


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China's surging inflation eased slightly in April after a slew of government moves to cool the overheated economy.

Consumer prices rose 5.3 percent over a year earlier, driven by an 11.5 percent jump in food costs, data showed Wednesday. That was down from a 32-month high of 5.4 percent in March but exceeded forecasts by private sector analysts who expected a bigger decline.

"Inflation has taken a bit of a step back in April but that doesn't signal the end of China's problems," said IHS Global Insight analyst Alistair Thornton.

Beijing has hiked interest rates four times since October and ordered companies to hold down price increases.

Analysts blame the inflation on the dual pressures of rising consumer demand that is outstripping food supplies and a bank lending boom that was part of Beijing's response to the 2008 global crisis.

Authorities are trying to raise food production and have clamped down on credit but it is expected to be months before those measures show results.

Prices of farm goods eased in April and China's main index of manufacturing activity declined, suggesting government efforts to cool an economy that grew by a rapid 9.7 percent in the first quarter were starting to gain traction.

The manufacturing figures "suggest that the Chinese economy is stabilizing to a more moderate pace of growth, and that the government's suite of policies to combat inflation is likely taking effect," said Jing Ulrich, JP Morgan's chairwoman of Global Markets for China, in a report to clients.


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