China says efforts to reign in inflation succeeding

China's efforts to keep inflation under control are working, the head of the country's state planning agency said on Sunday, forecasting prices will remain steady for the rest of the year.

Zhang Ping, chairman of the National Development and Reform Commission said inflation in February was likely to ease.         

To stabilise prices, the government will "appropriately" control money supply and bank lending, which have been rising at a fast clip over the past two years, Zhang told reporters on the sidelines of a meeting of the National People''s Congress in Beijing.

Zhang said efforts to increase grain supplies, improve "market order" as well as provide subsidies to the poor have already had an impact on inflation.  

China's grain reserves now account for 40% of annual consumption, higher than the normal international level of 17-18%, Zhang noted.  

However, he warned that China should not lower its guard against price rise pressures.                                            

Annual inflation has been running near a two-year high of more than 5% in recent months, driven by soaring food prices.   

The government aims to keep annual average inflation to 4% in 2011.