China says December inflation slows to 4.1%

China\'s consumer prices rose at their slowest pace in more than a year in December, latest official data showed, giving Beijing leeway to further ease credit restrictions to spur economic growth. The country\'s consumer price index, a key gauge of inflation, rose 4.1 percent year on year in December, the National Bureau of Statistics said in a statement, released on Thursday, compared with 4.2 percent in November. For the entire year of 2011 inflation stood at 5.4 percent, well above the government\'s full-year target of four percent and higher than the 2010 rate of 3.3 percent, the data showed. The December figure marked the fifth straight month that China\'s inflation rate has slowed since peaking at a more than three-year high of 6.5 percent in July, as measures introduced to curb surging consumer prices took effect. It was the lowest level since September 2010 when inflation rose 3.6 percent, but slightly higher than the 4.0 percent rise analysts had expected, according to a Dow Jones Newswires survey. Food prices -- a key driver of inflation -- rose 9.1 percent on year in December, compared with 8.8 percent in November, which analysts said was likely due to the unusually early Lunar New Year, which falls in January this year. The holiday, also known as the Spring Festival, is the most important celebration on the Chinese calendar. Retail sales typically soar ahead of the week-long break as people splash out on food, alcohol and other gifts for their families and friends. Growth in the producer price index, which measures the cost of goods at the farm and factory gate, slowed to 1.7 percent in December from 2.7 percent in November and 5.0 percent in October, the data showed. China has raised interest rates and the amount of money banks must keep in reserve numerous times in the past two years, amid official concerns that rising household costs and property prices could trigger social unrest. In late November policymakers began to relax credit restrictions as the downturn in Europe and the United States hurt demand for Chinese exports, a major driver of the world\'s second largest economy. Data released this week showed China\'s exports rose 20.3 percent in 2011, compared with an increase of 31.3 percent in the previous year. The growth rate is expected to halve this year as overseas consumers cut back on spending. But policymakers appear to have ruled out any major stimulus packages like the one unveiled in late 2008 to counter the global crisis, preferring instead to lower taxes and ramp up investment in projects such as low-cost housing. Senior Chinese leaders have repeatedly vowed to maintain a \"prudent monetary policy and proactive fiscal policy\" in 2012, suggesting they will move cautiously to open credit valves to avoid reigniting inflation.