INFLATION IN China jumped to a 16-month high last month and factory output expanded strongly, adding to pressure on the government to consider raising interest rates and allowing the currency to appreciate.

Consumer prices rose 2.7 per cent in February over the year before, up from 1.5 per cent in January and getting close to the 3 per cent target that premier Wen Jiabao set last week in his speech to the National People’s Congress.

Industrial production also accelerated, increasing 20.7 per cent in January and February over the year before, above analysts’ forecasts and the 18.5 per cent rise recorded in December. Factory-gate prices climbed 5.4 per cent in February against 4.3 per cent the month before. The jumps in inflation and industrial output follow a bigger-than-expected increase in exports last month. – (Copyright the Financial Times Limited 2010)