**Chinese inflation hit a 16-month high in February, causing economists to call for the government to tighten the economy to prevent overheating.**The annual rate of consumer price inflation rose to 2.7% in February, up from 1.5% in January, and ahead of analysts’ expectations of 2.3%.
UBS economist Tao Wang said China may now raise interest rates, which have been on hold since December 2007.
Others said inflation was simply lifted by the New Year celebrations.
Activities to mark the Chinese New Year take place over a number of days, and see a big rise in spending by families across the country.
As the New Year in 2009 fell in January not February, economists say the rate of increase in consumer prices in February 2010 was boosted as it compares with weaker spending last year.
However, Ms Tao said interest rates were still likely to rise.
“Our forecast is that a rate hike should happen relatively soon, if not this month then probably early in the second quarter,” she said.
Goldman Sachs economists Yu Song and Helen Qiao said it was now “vital for the government to take more decisive measures to tighten the economy to prevent overheating”.