BEIJING, Jan 8 (Reuters) - China's annual consumer inflation

likely accelerated to a seven-month high of 2.3 percent in

December, a Reuters poll showed, but price pressures are

expected to remain benign for the year.

The median forecast of 24 economists underscored tentative

optimism that a gradual strengthening in domestic consumption in

the world's second-largest economy is helping to offset

still-sluggish global demand for Chinese exports.

'Cold weather and holiday-related demand have led to a surge

in vegetable prices and a continued rise in pork prices,'

Barclays said in a research note. China's annual consumer

inflation had run at 2 percent in November.

Economists polled by Reuters also predicted China's producer

price index likely dipped 1.8 percent in December from a year

ago, easing from November's annual factory gate deflation of 2.2

percent.

Producer prices in China tumbled for much of last year, as

weak demand weighed on the cost of raw materials.

'The major drag in the near-term lies in the external

sector,' said J.P. Morgan's Haibin Zhu in a research note.

Economists said China's benign inflation trend leaves room

for Beijing to ease monetary policy further to boost an economy

struggling to throw off the drag from flagging export growth.

But wary of any spike in inflation, the People's Bank of

China has shied from forceful policy easing.

After cutting interest rates twice between June and July

last year, it has abstained from further cuts despite widespread

market calls for looser policy.

It has also refrained from lowering banks' reserve

requirements (RRR) since May 2012, when it cut the ratio of cash

it requires lenders to hold as reserves by 50 basis points to 20

percent for China's biggest banks.

Instead, the central bank has preferred in recent months to

ease policy by adding cash through short-term open market

operations, a measure that analysts say is more flexible than

outright cuts in rates or reserve requirements.

Still, the head of the Development Research Centre, a

government think-tank, advised the central bank last week to

stimulate economic growth by cutting RRRs this year to free up

funds for bank to lend.

The China Securities Journal quoted Zhang Xiaoqiang, vice

head of the National Development and Reform Commission, China's

top planning agency, as saying last week that China's consumer

inflation would run at 3.5 percent in 2013.

China's National Bureau of Statistics will release official

CPI and PPI data on Friday.

For more previews on upcoming Chinese economic data next

week, click CN-M-MCE-PRE.

FORECAST PPI CPI

(pct chg y/r)

ANZ -1.7 2.4

Bank of China -1.2 2.2

Bank of Communications -1.7 2.4

Barclays 2.4

BofAML -1.8 2.3

CA-CIB -1.7 2.4

CDB Securities -1.8 2.3

China Construction Bank -1.7 1.9

CICC -2.0 2.3

CITIC Securities -1.9 2.2

Goldman Sachs -1.8 2.4

Guangdong Development Bank -1.8 2.1

Haitong Securities -1.8 2.1

High Frequency Economics -1.6 2.0

Hwabao Trust -1.9 2.3

Industrial Bank -2.1 2.2

JPMorgan Chase -1.7 2.3

Merchant Securities -2.1 2.2

Mizuho Securities -1.5 2.2

OCBC Bank -1.8 2.5

Peking First Advisory -1.8 2.4

Shenyin & Wanguo Sec -1.8 2.3

Standard Chartered -1.9 2.5

UBS -1.8 2.3

Zheshang Securities -1.8 2.5

--------------------------------------

Median -1.8 2.3

High -1.2 2.5

Low -2.1 1.9

Prior -2.2 2.0

(Reporting By China Economics Team)

Keywords: CHINA ECONOMICS/INFLATION

(guiqing.koh@thomsonreuters.com)

COPYRIGHT

Copyright Thomson Reuters 2013. All rights reserved.

The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.