On April 5, the central bank announced the second interest rate hike this year. It was also the fourth increase since the start of 2010.

Despite the heightened cooling measures, domestic money supply remained abundant, as the central bank announced on Thursday that the broad money supply, which covers cash in circulation and all deposits, increased 16.6 percent year on year in the first quarter of 2011, up 0.9 percentage points from February.

New yuan loans increased to 679.4 billion yuan in March from 535.6 billion yuan in February.

"Emerging markets will continue to face inflationary pressures if developed economies do not halt their quantitative easing policies. Monetary polices have limited effects in curbing consumer prices, but they are necessary in managing inflation expectations and preventing hyper-inflation," said Guo Tianyong, a professor with the Central University of Finance and Economics.

Compared to February, consumer prices slightly dropped in March, according to the NBS. "It is a positive sign which shows the government's tightening moves have worked. Inflation can be controlled as long as the government policies are strictly carried out," said Sheng.

Despite year-on-year price hikes, retail sales rose 16.3 percent from a year earlier in the first quarter, compared to 15.8 percent during the first two months, according to the NBS.

Consumer spending, regarded as one of the three engines driving China's economic growth, contributed 60.3 percent of the country's 9,631.1 billion yuan of GDP in the first quarter, according to the NBS. It contributed to about 37 percent of China's 39.8 trillion yuan of GDP last year.

Trade, investment grow steadily

As for the other two engines of economic growth, foreign trade and investment both accelerated in the first quarter.

The country's foreign trade volume surged 29.5 percent to 800.3 billion U.S. dollars, with a trade deficit of one billion U.S. dollars in the first quarter. It was the first quarterly trade deficit in six years, according to the General Administration of Customs.

The deficit pulled GDP growth down by 0.5 percentage points in the first quarter, said the NBS.

The quarterly numbers signaled that China's trade has struck a basic balance between exports and imports, and its trade policies of stabilizing exports while increasing imports has taken effect, said Li Jian, research fellow from the Chinese Academy of International Trade and Economic Cooperation affiliated with the Ministry of Commerce.

Investment also rose as the country's urbanization accelerated. Urban fixed asset investment rose 25 percent to 3.9465 trillion yuan, accounting for 44.1 percent in the first quarter GDP, according to the NBS.

Investment in the property sector soared 34.1 percent year on year to 884.6 billion yuan. The NBS spokesman attributed the increase to construction of affordable housing.

The central government has allocated 103 billion yuan for the construction of 10 million units of affordable housing this year.

Home prices in most major Chinese cities continued to rise month on month in February, defying government efforts to cool the property market.

The NBS is set to release March home prices of a pool of 70 major Chinese cities on April 18.