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Holiday spending drives up inflation in China

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A seasonal surge in consumption during the Chinese New Year holiday lifted China’s inflation in January for the first time in five months.

The country’s consumer price index rose 4.5% from a year earlier, China’s National Bureau of Statistics said Thursday, up from 4.1% a month earlier.

Prices traditionally rise during the weeklong lunar new year holiday in response to the massive boost in spending on gifts, food and services.

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China has raised interest rates, bank capital reserve ratios and placed restrictions on the nation’s property market in an all-out effort to drive down inflation, which hit a three-year high over the summer.

Analysts say that battle is being won and expect inflation to settle below 4% in the coming months.

“Inflation is no longer policymakers’ chief concern,” said Alistair Thornton, a Beijing-based analyst for IHS Global Insight.

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