China's inflation rebounded in April but analysts said the increase remained mild and it may ease again as poultry and pork prices are falling in the wake of the bird flu outbreak.

April's Consumer Price Index, the main gauge of inflation, expanded 2.4 percent from a year earlier, the National Bureau of Statistics said this morning.
It accelerated from March's gain of 2.1 percent and was above the market expectation of 2.2 percent.

Yu Qiumei, a senior economist at the bureau, said rising vegetable prices were a major reason for the rebound.

Last month, prices of fresh vegetables jumped 5.9 percent year-on-year due to colder and drier weather. For the same reason, the cost of rice also surged 5.2 percent. The two contributed 0.35 percentage points to inflation growth.

But Zhou Hao, an economist at Australia & New Zealand Banking Group Ltd, said the risk of higher inflation is diminishing. "The inflation trend has eased sharply after the Chinese New Year," Zhou said. "Also, the bird flu outbreak may keep China's inflation mild because of falling poultry and pork prices."
In April, pork price slipped 6.5 percent on an annual basis, while overall food prices gained 4 percent.

Zhou said China's monetary policy stance has turned more supportive of growth and market liquidity will remain relaxed in the foreseeable future.
"Subdued inflation can offer opportunities for authorities to speed up structural reform, involving water, electricity and fuel prices, interest rate liberalization, deregulation of investment approval, and private sector participation in state-funded infrastructure projects," Zhou said.

The Producer Price Index, the factory-gate gauge of inflation, decreased 2.6 percent year-on-year last month, the lowest since last November, a sign that market demand remained weak.