China will go on tightening monetary policy, despite a small rise in the inflation rate in the year to January to an annual rate of 4.9%.

That was up from the 4.6% rate in the year to December and under the 5.1% (a 28 month peak) in the 12 months to November.

Some forecasts had put the CPI at around 5.3% to 5.4%, which would have been new 28 month highs.

That was because of the rebound in fresh food prices in January ahead of the Spring Festival and the Lunar New Year, and then the emerging impact of the worst drought for 60 years in parts of the wheat growing area of the country's north and northwest.

The best sign of the increasing inflationary pressures was in the