BEIJING -- China aims to hold this year's consumer price growth at around 4 percent, according to a government work report delivered by Premier Wen Jiabao at the annual parliamentary session on Monday.

"In projecting a CPI increase of around 4 percent, we have taken into account imported inflation, rising costs of factors of production, and people's ability to absorb the impact of price increases, while leaving room for the effect of price reforms," Wen said.

Keeping overall prices basically stable is "a key task affecting the people's interests and China's overall economic and social development," according to the report.

"We will control prices and prevent inflation from rebounding by effectively carrying out macroeconomic policies, managing the supply of money and credit, and striving for basic equilibrium in aggregate supply and demand," said the report.

The country's consumer price index (CPI), a main gauge of inflation, rose 5.4 percent year-on-year in 2011, exceeding the government's full-year target of 4 percent set at the beginning of 2011 as food prices jumped 11.8 percent and farm produce prices surged 16.5 percent.

To contain runaway inflation, China's central bank had raised banks' reserve requirement ratio (RRR) 12 times to a record high of 21.5 percent between 2010 and December 2011. The central bank has also hiked interest rates five times since October 2010.

In January, the holiday effect lifted the country's consumer price growth to 4.5 percent year-on-year, but it was still significantly lower from a 37-month high of 6.5 percent in July last year.

Wen pledged in the report that the government will continue to implement a proactive fiscal policy and a prudent monetary policy this year.

The government targets a 14 percent growth in broad money supply, or M2, according to the report.

Elaborating plans to keep prices under control, Wen vowed to increase production and ensure supply of farm produces, improve distribution and reduce distribution costs, and tighten oversight and ensure market order.

Consumer price growth is expected to slow to below 4 percent in February this year, due to continuous declines in food prices and a high comparison base from last year.

A latest report from the Bank of Communication (BOCOM) forecasted that China's February CPI growth would slow to 3.2 percent, and for the whole year, consumer prices would rise by 2.7 to 3.3 percent from the 2011 level.

Economists noted that despite eased inflation data, inflation pressure will still continue in the long run. They are concerned about rising production costs and that inflation might pick up when the government begins stimulating growth.

The BOCOM report warned that surging international crude oil price could bring imported inflationary pressure, which should be given "close attention."

The central bank has also conducted two RRR cuts since December last year to ease short-term credit crunch and maintain growth in wake of a lackluster external market.

But this year, the Chinese government has for the first time lowered its annual economic growth target to 7.5 percent this year after keeping it around 8 percent for seven consecutive years.

Liu Shucheng, an economist with the Chinese Academy of Social Sciences, said the lowered target would help maintain a stable price level.

"The government is seeking a balance between economic growth and inflation and keep them both at a stable level," said Wang Yiming, deputy director of Macroeconomic Research Institute of the National Development and Reform Commission.