China's inflation spiked to a six month high in December after a freezing winter pushed up vegetable prices, possibly complicating efforts to sustain a shaky economic recovery.
Consumer prices rose 2.5% over a year earlier, up from November's 2% and the fastest rise since June, the National Bureau of Statistics said.
That was driven by a 14.8% jump in vegetable prices after the coldest winter in seven years led to smaller harvests.
The statistics bureau said vegetable prices in some areas rose as much as 40.8%.
Higher inflation could hamper the government's ability to support China's recovery with interest rate cuts or other moves for fear of igniting a politically dangerous price spiral. Consumer prices are especially sensitive in a society where the poorest families spend up to half their monthly incomes on food.
The World Bank and private sector analysts expect about 7.5% growth in China this year after 2012's estimated 8% expansion. But analysts warn China still could face a danger of a "hard landing" with much lower growth if trade slumps or the country suffers a financial shock from a decline in housing prices or weak investment.
Bank lending rose 15% in the second half of last year to 8.2 trillion yuan ($1.3 trillion) but total credit grew by about 20% to 16 trillion yuan ($2.5 trillion), the government reported this week. Analysts expect bank lending to rise to about 9 trillion yuan ($1.4 trillion) this year.
China's trade growth rebounded strongly in December in a positive sign for a recovery but analysts warn it will be hard to sustain that momentum due to weak demand in key US and European markets. That means China has to rely on domestic consumption that is growing but more slowly than authorities want and a flood of government-led investment.
