China has set the target of keeping this year's CPI at around 4.8 percent, given the inflationary pressure and strong influence from last year, Premier Wen Jiabao said at the annual parliamentary session on Wednesday.

The primary task for macroeconomic regulation this year is to prevent fast economic growth from becoming overheated growth and keep structural price increases from turning into significant inflation, Wen said in his report to the First Session of the 11th National People's Congress opening on Wednesday.

"At the same time, we have to take into consideration the ability of individuals, enterprises and all sectors of society to tolerate price increases and try our best to avoid sharp price increases," he said.

Wen admitted the country is facing "increasing inflationary pressures" and its task of holding down inflation is "difficult."

"The current price hikes and increasing inflationary pressures are the biggest concern of the people," he said.

Last year, China's consumer price index (CPI) rose by 4.8 percent year-on-year, the highest since 1997, mainly due to rises in the cost of food and housing.

Wen said the price increases had a great impact on the people's lives, particularly on the lives of the low-income population.

The premier saw diverse factors behind the domestic price hikes, mainly increases in the prices of primary commodities on the international market.

"Because factors driving prices up are still at work, upward pressure on prices will remain great this year," he said. "In addition, prices of the means of production have continued to rise and real estate prices have risen steeply, making the task of holding down inflation difficult."

China's annual CPI rise averaged 2.1 percent between 2003 and 2006.

The year-on-year CPI rise exceeded 6 percent for the first time in August 2007 and for five consecutive months.

In January, China's monthly CPI rose by 7.1 percent, a result of price increases during the Chinese Lunar New Year and the severest winter weather attacking central, southern and eastern China in 50 years.

(Xinhua News Agency March 5, 2008)