Premier: Curbing inflation tops govt agenda

The country faces both domestic and external challenges in fighting inflation, which reached 4.9 percent in February year-on-year. China has set a target of keeping inflation at or below 4 percent for the whole year.

"International factors are behind China's inflation," Wen said, citing a "certain country's quantitative easing policy" that has led to drastic currency and commodity price fluctuations.

The US Federal Reserve announced in November it would pump $600 billion into the US economy to bolster growth, which analysts said would in turn raise the risk of rising prices across the world as it leads to a weakening dollar and increasing liquidity. Oil prices, for example, have recently hovered at around $100 a barrel.

"A severe difficulty is international food price inflation, which China cannot control," said John Ross, visiting professor at Antai College of Economics and Management, Shanghai Jiao Tong University. "This will continue even if excess liquidity is removed inside China," he said.

Worse, some even forecast the US Fed may continue to inject capital into the market after June in a so-called third round of quantitative easing.

Although he holds that the possibility is slim, Ross said if there is a third round of easing, it will make the situation more difficult for China, as it will increase international inflation.

China will strengthen grain production and circulation to ensure food prices are stable, Wen said. Increasing food prices account for about 30 percent of the country's inflation.

Experts, however, are divided over how the price trend will evolve this year.

HIS Global Insight, a consulting firm, said inflation is yet to peak in China. "The full impact of the oil price shock is yet to reveal itself as the government has been behind the curve in raising the retail gasoline prices," it said in a research note. Besides, bank lending remains rampant and liquidity is strong, it said.

However, Ba Shusong, senior economist of the State Council's Development Research Center, said the peak may have passed, though inflation could remain high in the coming months since it is coming off a low base from last year.