OREANDA-NEWS. March 12, 2012. Anhui province's consumer price index (CPI), a main gauge of inflation, rose 2.9 percent year-on-year in February, the National Bureau of Statistics (NBS) said on Friday.

The growth, down from 4.7 percent in January, has put an end to the "negative deposit rate". It is 0.3 percentage points lower than the national average.

Food prices, which account for nearly one third of the basket of goods in the country's CPI calculation, increased 5.6 percent from a year earlier and contributed to 1.83 percentage points in February's CPI rise.

Prices of eggs dropped 16.9 percent year-on-year in February, hitting a 13-year low.

"The sharp decrease in the February reading was largely caused by a higher base last February when Chinese Spring Festival for 2011 was celebrated," Song Hong, a well-known economist said.

The CPI rose 5.2 percent year-on-year in February 2011, the NBS said.

"The CPI growth has softened from 5.6 percent in 2011, 4.7 percent in January in 2012 to 2.9 percent in February, which indicates the government's policies to control prices have worked," Xu Yaping, professor of the Department of Finance of Anhui University said.

Earlier this year, the provincial government set a full-year CPI growth target of 4 percent for 2012. Although the CPI is much lower in February, it is premature to talk about success at this stage, Song said, adding that this year will probably see considerable fluctuations in the CPI growth rates.

That comment was echoed by Zheng Lanxiang, professor of the Department of Finance of Anhui University.

"The resource tax reforms set to be implemented this year may push up production costs, which, coupled with current labor shortage, is bound to hike prices of goods," Zheng said.

In addition, China's CPI will continue to be affected by prices of global bulk goods which have been on the rise due to easy economic policies the US and the European Union adopt.