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Industry grows in tandem with inflation in Jan-Feb
Aggregated Source: Shanghai Daily: Business

SHANGHAI'S industrial production and investment increased at a faster pace in January and February compared with a year earlier, but inflation also rose to a nine-month high, making it tricky to balance economic expansion and price increases.

The Consumer Price Index, the main gauge of inflation, jumped 2.6 percent year-on-year in February, the fastest pace since last May, the Shanghai Statistics Bureau said today.

Although the city's inflation was behind the national average of 3.2 percent in February, it still put authorities on alert.

"The rate climbed mainly due to the Spring Festival factors, but it is undeniable that a new round of inflation is building," said Li Maoyu, an analyst at Changjiang Securities Co.

In the first two months, Shanghai's Consumer Price Index expanded 2.3 percent year-on-year, also lower than the national average of 2.6 percent during the period.

Food costs, which account for nearly one-third of the CPI basket, advanced 5 percent in February and became the main driver of the spiraling inflation.

Luckily, this happened in the first two months of the year, leaving room for the city to balance growth and inflation, analysts said.

Industrial production totaled 493.6 billion yuan (US$78.3 billion) in the January-February period, up 7.5 percent from a year earlier. Fixed-asset investment rose 11.4 percent to 63.6 billion yuan (US$10 billion).

"Shanghai is the first among mainland cities to report an economic rebound and the growth momentum is stabilizing," said Yan Jun, chief economist with the Shanghai Statistics Bureau.

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Copyright Shanghai Daily: Business