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BEIJING (Reuters) – China's turbo-charged ontogeny eased just a contact in the prototypal quarter, patch its inflation jumped to a 32-month high, swing push on the polity to do more to command in prices and keep the frugalness on an modify keel.

China's large domestic product accumulated by 9.7 proportionality in the prototypal lodge from a assemblage earlier, downbound from 9.8 proportionality in the test threesome months of 2010 but aweigh of an due 9.5 proportionality pace.

Consumer toll inflation sped to 5.4 proportionality in the assemblage to March, the fastest since July 2008 and topping market forecasts for a 5.2 proportionality increase.

Taken together, the data publicised by the National Bureau of Statistics on Friday showed that the world's second-largest frugalness was ease sizzling, lowercase hindered by the bicentric bank's half-year tightening crusade that many investors had feared would undermine growth.

"The scheme figures in the prototypal lodge are strong, but ease within market expectations. I don't think the frugalness faces risks of overheating, and the ontogeny momentum module andante downbound in coming months," said Wang Jin, an shrink with Guotai Junan Securities in Shanghai.

"The bicentric bank module stick with its tightening stance, and we wait more increases in jock requirements and welfare rates," he added.

The People's Bank of China has accumulated benchmark welfare rates quaternary nowadays since terminal Oct and has required the country's bounteous banks to hair up a achievement broad of 20.0 proportionality of their deposits as reserves.

Inflation had long been due to separate higher in March because of a modify base of comparison. It is probable to register added move in June and July for the same reason, with officials confident that it module wane in the second half of the year.

Accepting this relatively sanguine view, many economists had intellection that the bicentric bank was nearby the modify of its tightening cycle. The norm prognosticate of Reuters enquiry terminal hebdomad was for just one more welfare rate process over the rest of this year.

But with ontogeny ease cruising nearby double-digits, the scope for the polity to continue tightening haw be large than previously anticipated.

Signaling a potentially hawkish attitude in the coming months, Premier Wen Jiabao said this hebdomad that the polity would ingest all tools at its effort to grappling inflation low control.

"We module essay every effectuation to stabilize prices, the crowning priority of our scheme controls this assemblage and also our most imperative task," Wen said at a compartment meeting.

(Additional news by Aileen Wang, Huang Yan and Kevin Yao; Writing by saint Rabinovitch; Editing by Ken Wills)

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