China raised fuel prices Wednesday for the first time in five months, showing Beijing's confidence it can control inflation, ahead of the release of data expected to show rapid growth accelerated in the first quarter of the year.

Observers are watching to see whether growth and inflation data due out Thursday show a need for drastic action to prevent overheating. The economy expanded by 10.7 percent in the final quarter of 2009 and analysts expect the latest numbers to show growth rising to nearly 12 percent in the January-to-March period.
""Policymakers seem to think that inflation is still well under control and they seized the opportunity to raise fuel prices, as they expect it will not harm the economy,"" said Qiu Xiaofeng, a petroleum industry analyst at China Merchant Securities, in Shanghai.
The price hikes of 4 percent to 4.5 percent for gasoline, diesel and other fuels, the first since November, were in line with expectations.
Last year, the government raised prices eight times as it reformed its pricing system, seeking to keep refiners running at high enough capacity to meet demand as the economy recovers.
""The price rise is to ensure fuel supplies to meet the peak consumption as spring planting season approaches and industrial activities accelerate,"" said the Cabinet's planning agency, the National Development and Reform Commission, on its Web site.
The NDRC said the price hike would add to inflation, but estimated the direct impact at only 0.07 percentage points. It vowed to clamp down on any ""chain reaction price adjustments.""
Inflation rose to 2.7 percent in February compared with a year earlier, close to the government's official target of 3 percent for the year.
(Source: The Economic Times)