Inflation seen as top risk to China's economy

BEIJING (Reuters) - China needs to remain vigilant about inflationary pressures spreading from food to other products, despite a dip in overall consumer price rises in March, an assistant central bank governor said on Sunday.

Calling inflation the country's top economic risk, Du Jinfu said the easing in annual consumer inflation to 8.3 percent in March from 8.7 percent in February mainly reflected seasonal factors and should not give policy makers reason to relax.

"Domestic inflationary pressure is continuously growing. The prices of upstream products are rising fast. We need to be cautious about price surges spreading to non-food items," Du told a conference.

Consumer inflation is running near 12-year highs, pushed up mainly by soaring food prices, which rose 21.4 percent in the year to March.

Many economists have noted that rapidly increasing factory gate prices could be a sign of further pressure to come.

The producer price index was up 8 percent from a year earlier in March, compared with a 2.7 percent annual rise in March 2007.

(Reporting by Langi Chiang; Writing by Jason Subler; Editing by Lincoln Feast)