Chinese inflation slowed sharply in March as food prices fell in the wake of the country’s New Year holiday and the central bank drained cash from the economy.

Consumer prices rose 2.1 per cent in March from a year earlier, below expectations and down from a ten-month high of 3.2 per cent in February when China celebrated its Lunar New Year. Food price inflation, which had surged to 6 per cent year on year in February, fell back to a pace of 2.7 per cent.

Looking past the seasonal rise and fall in prices caused by the holiday, Chinese inflation has remained mild this year. The average increase in consumer prices in the first quarter was 2.4 per cent, up only a little from the final quarter of 2012. Analysts said the subdued inflation was a reflection of how the Chinese economic recovery has been steady but unspectacular.