The consumer price index -- or CPI, a key measure of inflation -- rose 4.4 percent year-on-year last month, compared with 3.6 percent in September, the National Bureau of Statistics (NBS) said.

It was the fastest pace since September 2008 -- the start of the global financial crisis, when prices rose 4.6 percent. Prices were up 0.7 percent month-on-month.

The October figure, which outstripped several analysts' predictions, comes as the world's second-largest economy battles to rein in consumer prices and soaring housing costs.

The government has set a target of three percent for the full year.

Over the first 10 months of the year the CPI was up three percent, mainly driven by rising food prices and living costs, NBS spokesman Sheng Laiyun told a news conference.

"Price pressures are increasing. That means pressure on macroeconomic controls is increasing," Sheng said.

People's Bank of China Vice Governor Hu Xiaolian said the central bank was paying "close attention" to inflation, adding it would use monetary policy to fight inflation. She declined to elaborate.

The October CPI marked a "very sharp increase" and persistent upward pressures on prices meant any dip in the coming months would be shallow and short-lived, said Brian Jackson, a senior strategist at Royal Bank of Canada.

"It's obviously eye-catching.... There are some reasons to think it might pull back in the next couple of months but I wouldn't want to bet the house on that," Jackson told AFP.

"More rate hikes are clearly on the way, and today's data also reinforces the case for faster currency appreciation," he added in a note.

The People's Bank of China last month raised its benchmark one-year lending and deposit rates by 25 basis points each -- the first hike in nearly three years.

Late Wednesday, the central bank moved to tighten liquidity by ordering banks to set aside more reserves for a fourth time this year.

New lending in October fell slightly from the previous month to 587.7 billion yuan (88.6 billion dollars), the central bank said Thursday.

"What we are really seeing is stable growth being supported by continued high levels of lending," said Tom Orlik, a Beijing-based economist with Stone and McCarthy Research Associates.

"The real question is when they turn the lending tap off, what happens to the growth? We don't know the answer to that."

China's battle to restrain prices comes amid worries that the US Federal Reserve's move to inject 600 billion dollars into the American economy could increase speculative "hot" money flows into China and fuel inflation.

"The new round of foreign quantitative easing policy will release enormous liquidity, which will have a rather significant impact on the Chinese economy," Sheng told reporters.

The Fed measures were expected to fuel inflation in China, he said, adding: "We will have to make greater efforts in order to reach the full-year inflation target."

The head of China's top economic planning agency, National Development and Reform Commission chief Zhang Ping, warned earlier this week that the full-year CPI would exceed the government's three percent target.

Other key data released by the statistics bureau showed the world's second-largest economy displayed signs of slowing last month.

Industrial output from China's factories rose 13.1 percent on year, slower than September's 13.3 percent rise, as Beijing closed highly polluting operators and rationed power to energy-intensive industries.

Fixed asset investment in urban areas, a measure of government spending on infrastructure, rose 24.4 percent in the January-October period, slightly slower than the 24.5 percent in the first nine months of the year.

Retail sales, a key measure of consumer spending, rose 18.6 percent on-year.

Chinese shares closed up 1.04 percent in Shanghai -- a seven-month high -- with metal and coal companies leading the gains on expectations they would benefit from rising prices, dealers said.

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