China continues to show strong growth but so does inflation

China's runaway growth was even stronger than expected at the start of this year, official figures showed, stoking fears about overheating as inflation rocketed to a 32-month high.



Gross domestic product (GDP) grew 9.7pc year-on-year in the first three months of 2011, just off the 9.8pc seen the previous quarter and confounding forecasts of an easing to 9.4pc. Quarter-on-quarter, growth was 2.1pc.

The downside of the surging growth is prices are rising too fast. Despite efforts from Beijing to curb the country's credit boom - raising interest rates four times since October - inflation showed no signs of easing as it reached 5.4pc in March from February's 4.9pc.

Food prices were up 11.7pc on the previous year, which is making Beijing particularly worried about social unrest.

"The government cannot seem to slow the economy down," said Alistair Thornton, an economist at IHS Global Insight. India also reported a higher-than-expected inflation yesterday, at just under 9pc in the year to March.

The strong growth of China, India and other newer economic powers is driving the cost of oil, grain and other commodities upwards, translating into mounting price pressure in those economies and elsewhere in the world. The US inflation rate yesterday came in at its strongest in over a year, just off 2.7pc.

Mounting inflation pressures raise the prospect of steeper tightening measures from authorities to rein in prices, which would drag on growth around the world.

The Chinese figures also marked the fifth time in six months that the inflation number was widely reported ahead of its official released.

China's National Bureau of Statistics said it condemned "any leak", but data on prices keeps appearing early as it is highly prized by markets.

The UK's Office for National Statistics this week saw rumours surround its own March inflation figure, after talk among traders anticipated a shock fall to 4pc. A spokesman said there was "no evidence of a leak.