Official data has revealed Chinese inflation is up to a ten-month high.
Figures released by the government indicated that the Asian nation's consumer price index rose 3.2 per cent in February from a year earlier.
Bank of America Merrill Lynch analysts stated the rise in inflation is linked to the Lunar New Year, which is usually associated with an increase in consumer spending.
"We expect limited market and policy impact as investors and officials understand the Lunar New Year distortions quite well," they said.
The analysts added that it is too early to call for significant monetary tightening in China at the moment.
Earlier in the month, an announcement from the Chinese government that it is set to introduce new taxes for home sellers resulted in a dip in stocks.
The Shanghai composite index fell 3.65 per cent to close at 2,273.40 on March 3rd and there were also falls for the Hang Seng Index, which dropped 1.5 per cent to 22,537.8.
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