The Chinese government should set an inflation target of between 3 and 5 per cent for 2010, an influential lawmaker said.

Premier Wen Jiabao will announce this year's consumer price index (CPI) target in his address next month to the National People's Congress, China's rubberstamp parliament.

Many analysts expect a target of 3 per cent. But He Keng, a deputy director of parliament's Financial and Economic Committee, said Beijing should tolerate higher inflation.

"If China's economic growth is above 9 per cent, China should target CPI in the range of 3-5 per cent," He wrote in the latest edition of the journal Qiushi, or Seeking Truth.

Last year, China aimed for 4 per cent CPI inflation; prices actually fell 0.7 per cent.

"If the CPI falls below 3 per cent, the economy will lose its vitality. Companies will be reluctant to invest while consumers will be unwilling to spend as they will expect lower prices," He added.

Fan Gang, an adviser to the central bank's monetary policy committee, said on Monday that manufacturing over-capacity and ample food supplies would restrain price pressures.

Also speaking on Monday, Ba Shusong, a senior research fellow at the Development Research Centre, a Cabinet think-tank, said China might raise interest rates once consumer inflation exceeds the one-year benchmark deposit rate of 2.25 per cent.