China’s inflation is back?

China’s inflation accelerated more than expected as food prices have turned higher yet again. CPI rose 3.6  percent. As food prices rise, the government has less options when it comes to stimulating the economy. Are we about to see a renewed focus on food prices just like last year? From Bloomberg;

Today’s data show Premier Wen Jiabao’s officials may need to remain alert to the risk of inflation bouncing back even after price increases stayed below the government’s 4 percent target for a second month. China’s economy may have expanded last quarter at the slowest pace in almost three years, showing the limits of the nation’s contribution to global growth as U.S. job growth weakens and concern mounts aboutEurope’s sovereign- debt crisis.

“We expect inflationary pressures to rise going forward as growth momentum has picked up and structural inflationary pressures remain large,” said Liu Li-Gang, Hong Kong-based head of Greater China Economics at Australia & New Zealand Banking Group Ltd. The central bank “will remain cautious in its policy outlook,” he said.

Authorities will seek to “prevent a rebound” in consumer prices and manage inflationary expectations, Wen said during a visit to southern China from April 1 to 3.

China’s producer price index, a leading indicator for consumer inflation, fell 0.3 in March from a year earlier after showing no change in February, the statistics bureau said. That was the first decline since November 2009 and matched the median forecast in a Bloomberg News survey of 29 economists.

Estimates for the CPI ranged from 2.7 percent to 3.6 percent. The gauge rose 3.2 percent in February, while food prices rose 6.2 percent.

Yao Wei, a Hong Kong-based economist with Societe Generale SA, said the data will complicate the timing of monetary-policy actions as economic growth slows. Inflation may decelerate this quarter because of higher bases of comparison with the same months in 2011, Yao said. She wouldn’t rule out a reserve-ratio cut for April, while an interest-rate reduction is “extremely unlikely.”