UPDATE 1-China can meet 4 pct inflation target - official paper
* Industrial oversupply, grain stocks to limit inflation - paper
* Prices could climb further in coming months - researcher (Adds more comments from a government researcher)
By Aileen Wang and Simon Rabinovitch
BEIJING, March 28 (Reuters) - China will be able to cap inflation below the full-year target of a 4 percent average rise in prices, the People's Daily said in a front-page editorial published on Monday.
As the main newspaper of the ruling Communist Party, the People's Daily commentary reflects growing confidence in Beijing that the government has inflation under control, despite soaring global fuel prices.
The newspaper cited a number of factors as favorable to slowing the upward momentum of consumer prices, including an oversupply of industrial products, abundant grain stocks and large foreign currency reserves.
"The Party and the State Council are paying close attention to price stability, and we have reason to believe that this year's inflation target can be reached, as long as we take active measures," the commentary said.
The implementation of effective policies, including reserve requirement and interest rate increases, had also helped against inflation, the newspaper added.
Beijing has raised interest rates three times and bank reserve requirements six times since October. Consumer inflation steadied in February at 4.9 percent, although economists expect it to tick higher in coming months.
The newspaper also warned that the country could face rising risks from imported inflation, as reflected in mounting industrial production costs.
"We should not relax efforts to manage inflation just because our policies have shown initial results," it quoted Ba Shusong, a government think tank economist, as saying.
Separately, Xu Ce, a researcher at the State Information Centre, another government think tank, said domestic consumer prices could climb further in coming months, following surging global commodities prices, which could be further intensified by Japan's post earthquake reconstruction demand.
Frequent central bank tightening measures to combat inflation could risk damping overall social demand and blunting economic growth momentum, Xu said, adding that the central bank should be cautious in taking more tightening steps.
"Generally speaking, with slowing economic growth overlapping rising inflationary pressure, macro-economic policies may enter a period of observation, and will require cautious operations (by the central bank)," Xu said in an article in the official Shanghai Securities News. (Editing by Chris Lewis)
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