China's retail sales grew 15.2 percent to 2 trillion yuan (US$293.8 billion) in the first two months this year, the National Bureau of Statistics said on Thursday.

The figure, although lower than the 20-percent-plus increase a year earlier, was encouraging, analysts said.

Retail sales growth in January and February was equal to or even higher than last year adjusted for inflation, said Zhuang Jian, senior economist with Asian Development Bank.

The consumer price index (CPI), a major gauge of inflation, hit a 12-year high of 8.7 percent in February 2008 but fell 1.6 percent in the same month this year.

"Domestic consumption has remained stable so far, despite the economic slowdown," he added.

In January and February, urban retail sales rose 14.4 percent to 1.35 trillion yuan, while rural sales increased 17 percent to 653.9 billion yuan, according to the NBS.

Wholesale and retail sales rose 14.8 percent to 1.68 trillion yuan. Catering and hotel activity was up 18.9 percent to 301.6 billion yuan.

Xu Lianzhong, an economist with the National Development and Reform Commission, said rising retail sales reflected the impact of the government stimulus plan, which aimed to maintain 8-percent economic growth by buoying domestic spending.

Another factor was the Spring Festival, which began in January. This long annual holiday is a major shopping period in China.

However, he warned that the strength in retail sales wouldn't persist the rest of the year as income growth slackened amid the economic downturn.

Zuo Xiaolei, chief economist with Galaxy Securities, expressed optimism about consumption, saying retail sales were likely to keep growing at the January-February pace.

Zuo suggested the government initiate do more to stimulate consumption, not just large-scale investment. "Government spending alone is not enough to push the economy forward."

(Xinhua News Agency March 12, 2009)