Netting out the effects of the government's one-off relief measures, the underlying inflation rate was 1.6 percent. The increase on January was due to the difference in the timing of the Chinese New Year, resulting in a surge in prices for package tours, fresh vegetables, meals bought away from home and poultry.

The department said overall price pressures have inched up but were still tame in early 2010. Import prices in overall terms are likely to stay soft in the near term, in the face of the excess capacity in the global economy.

Locally, the expansion in production capacity brought about by productivity growth and rising investment in recent quarters should help alleviate the pressure on local business costs. The inflation rate, whilst likely to climb up further as the economic revival takes hold, is likely to remain relatively modest in the near term.