China's December inflation rises to 2.5%(2)

He suggested the government stay vigilant against inflation, but ruled out the possibility of hyperinflation this year as the economy is undergoing a mild recovery and many industries will continue to face oversupply woes.

Wang said he expects the CPI to stay between 3 to 4 percent this year.

The NBS said in the same release that China's producer price index (PPI), which measures inflation at the wholesale level, fell 1.9 percent year on year in December.

This marks the 10th straight month of decline after the PPI dropped in March for the first time since December 2009.

The drop was smaller than the 2.2-percent decrease in November, indicating that the economy has been stabilizing.

With inflation poised for a moderate increase, the government may slow the pace of interest rate and reserve requirement ratio (RRR) cuts for fear of reigniting a price spiral.

In order to buoy growth, the central bank cut the RRR twice in 2012. It also lowered benchmark interest rates twice over the course of the year.

"The government should continue to keep a prudent monetary policy in 2013, and adopt a more proactive fiscal policy and extend tax cuts to stabilize economic growth," Wang said.

China's economy grew 7.4 percent in the July-September quarter from a year earlier, the slowest pace since the first three months of 2009 during the global financial crisis.

The NBS will release fourth-quarter gross domestic product figures, retail sales, fixed-asset investment and other key economic data next Friday.