BEIJING, Sept 13: China reported a marked slowdown in investment and money supply growth on Monday, but stubbornly high inflation suggested it was too early to rule out further steps to cool the world's seventh-largest economy.

Central bank governor Zhou Xiaochuan told Reuters last week Beijing would review August's economic data before deciding whether to ease or thten restrictions on credit and investment.

Premier Wen Jiabao was quoted by state media as saying officials must continue to improve measures to cool the economy, suggesting it was too early to end lending curbs and other austerity measures.

But the picture is not so clear for all economists, who are struggling to interpret the mixed bag of statistics. There are contradictions in the indicators," said Ze as in July and slightly below the 5.4 per cent forecast by analysts. Compared with July, though, prices rose 0.7 per cent, snapping a string of month-on-month falls.

With inflation hovering around the official interest rate for one-year corporate variations, Qu Hongbin at HSBC in Hong Kong estimated that consumer prices rose 0.3 per cent from July and said China would need to raise interest rates by half a percentage point in the coming months.

A negative real lending rate would fuel the uarter-point by the end of the month. But economist Ben Simpfendorfer said August's CPI was tamer than expected and he revised down his full-year inflation forecast to 4.3 per cent from 4.8 per cent.

Worried that heated growth could sede it tougher to gain approval for industrial projects. Another sign of mounting inflationary pressure turned up in August's producer prices, which rose 6.8 per cent from a year earlier after increasing 6.4 per cent in the year through July.

Butt higher than a year earlier, an official with the State Statistical Bureau said. That was well below the 30 per cent forecast of economists polled by Reuters. The pace of investment, which covers spending on things like roads and property, is onet on Thursday. -Reuters