China’s consumer prices rose 5.4 percent

China’s consumer prices rose 5.4 percent in March from a year earlier, the statistical agency said Friday, indicating the world’s No. 2 economy still faces high inflationary pressure.

Last month’s growth in the consumer price index was up from a 4.9 percent gain in February, according to China’s National Bureau of Statistics. The figure was in line with market estimates of above 5 percent.

Many market watchers expected a high inflation rate for March due to rising international commodities prices and still strong domestic demand.

Rising prices of imported goods put upward pressure on China’s domestic consumer prices. Political instability in the Middle East and North Africa and the reconstruction efforts in post-disaster Japan were expected to jack up international oil prices.

Analysts forecast China will continue with its tightening measures as inflation continues to be China’s top macro risk in Chinese policymakers’ eyes.

“It is critical for China to keep its monetary tightening agenda in place in the coming months to check liquidity and inflation,” said Qu Hongbin, co-head of Asian Economics Research at HSBC Ltd. “It is too early to ease monetary tightening.”

He expected reserve ratio hikes of another 100 basis points in the coming months and another 25 basis points-interest rate hike

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