China's annual inflation rate hit 4.5 percent in January, the highest level in three months, data showed Thursday, after consumers splashed out on food and gifts over the Lunar New Year holiday.

The country's consumer price index, a key gauge of inflation, was higher than the 4.1 percent in December and ended five straight months of easing price pressures caused by government restrictions on lending and property purchases.

Analysts said the holiday, also known as the Spring Festival, was unusually early this year and had distorted the monthly data.

Retail spending typically soars during the week-long festival, the most important celebration in the Chinese calendar, as consumers ramp up spending on food, wine and gifts for family and friends.

Before January, inflation had eased for five months in a row after hitting a more than three-year high of 6.5 percent in July and analysts said the downward trend would likely resume in February as the economy continued to slow.

"It was inevitable that we would see some impact of the Lunar New Year holidays, which were in January this year but February last year, but it seems that this impact was bigger than expected," said Brian Jackson, a senior analyst at Royal Bank of Canada in Hong Kong.

Analysts had expected inflation to rise 4.1 percent, according to a Dow Jones Newswires survey.

The market barely reacted to the data, with the Shanghai Composite Index closing up 2.06 points, or 0.09 percent, at 2,349.59.

The rebound in inflation was driven by food prices, which soared 10.5 percent year-on-year in January compared with 9.1 percent in December, the National Bureau of Statistics said in a statement.

The producer price index, which measures the cost of goods at the farm and factory gate, rose an anaemic 0.7 percent in January compared with 1.7 percent in December, the statement said, indicating consumer price pressures would ease in the coming months.

Bank of America-Merrill Lynch economist Lu Ting said the data was "significantly distorted" by the holiday "so investors definitely should not read too much into the inflation" figure.

UBS economist Wang Tao agreed, saying "the downward trend of CPI inflation has not been altered".

There is mounting evidence that China's growth is slowing as the ongoing debt crisis in Europe and weakness in the United States hurts demand for Chinese exports, a key driver of the world's second-largest economy.

The International Monetary Fund (IMF) this week warned that an escalation of Europe's fiscal woes could slash China's economic growth by half this year, and it urged Beijing to prepare stimulus measures in response.

In the IMF's "downside scenario" China's growth would fall by around 4.0 percentage points this year from the 8.2 percent rate it projected in January.

But Chinese leaders have been very cautious about opening the credit valves for fear of reigniting inflation, which has the historic potential to trigger social unrest in the country of more than 1.3 billion people.

Late last year the central bank eased lending restrictions on banks and analysts expect similar moves this year as authorities try to spur economic activity and prevent a damaging collapse in the property market.

Policymakers are also easing taxes and improving funding channels for small and medium-sized businesses which are huge employers but are often shunned by the major banks.

"There remains plenty of downward momentum in China, despite a moderation in the slowdown," said Alistair Thornton, a Beijing-based analyst for IHS Global Insight.

"The property market remains in the throes of a correction, which is dragging down investment spending and spreading deflationary pressure (and) the eurozone will act as a drag on export growth this year."