RISING prices of raw materials and food pushed up producer prices in Shanghai in the first quarter, the Shanghai Statistics Bureau said today.

The city's factory-gate inflation gauge rose 1.9 percent in the first three months from a year ago. The growth expanded month by month with the index of January, February and March settling at 1.5 percent, 1.7 percent and 2.4 percent respectively.

"The rise in producer prices was led by higher costs of raw materials and uncurbed food prices," said Lu Yuhua, an analyst with the bureau. "Price hikes on the international market and the snowstorms this winter triggered the quick appreciation of prices."

Compared with the same period last year, the cost of raw materials rose 5.4 percent in January. The figure climbed to 9.2 percent in March. For the three months, costs increased 7.1 percent with strong jumps in the coal, ore and petroleum sectors.

In February, Shanghai-based Baosteel Group signed an agreement with Brazilian Companhia Vale do Rio Doce and accepted 65 percent and 71 percent price increases in two types of iron ore.

Food prices accelerated due to the worst snowstorms in five decades.

Factory-gate food costs advanced 32.7 percent in the first quarter. Edible oil prices rocketed 60.7 percent.

"The regulator has imposed temporary price intervention in some key food categories. The edible oil prices and some others are expected to decline in the second quarter," said Lu.

Rising costs have added pressure to some businesses in China, whose producer prices rose 6.6 percent in February to touch a four-year high.

According to the National Bureau of Statistics, the prosperity index – a study of factors that drive and restrain the development of domestic companies – dropped 7.4 points in the first quarter from a year ago.

But Chinese entrepreneurs still held a positive view of business prospects. The bureau's business confidence index edged up to 140.6 in the first quarter from 139.6 in the previous three-month period.