China's inflation rate reduced sharply to 3.2 percent for February, which is a 20-month low, according to data released on Friday, showing signs that the price pressure is gradually diminishing.

In January, the inflation rate was 4.5 percent. On Monday, at the annual meeting of the National's People's Congress in Beijing, Premier Wen Jiabao announced that China's set rate of inflation would be 4 percent for 2012.

According to economists, 30 percent of China's consumer price index is represented by food price. In February, the price of pork climbed by 15.9 percent while it was 25 percent in January. The prices of fruits came down by 6.1 percent for February.

As expected, subsequent to the end of Chinese New Year holidays, food prices have come down. This, in turn, resulted in the consumer price index coming down for the month of February.

The diminishing inflation should be good news for it can help the government in ensuring that it can invigorate growth without much concern of price rises. China will target an economic growth of 7.5 percent in 2012, which is clearly a decrease from the rate of growth of the last few years.

Last month World Bank President Robert Zoellick had said that China's export- and investment-driven economic model, though successful for decades, is no longer sustainable and reforms are needed to prevent a sudden slump in growth. World Bank had reported that growth will slow down to between 5 and 6 percent annually by 2030 and a major overhaul will be needed to sustain even that level.

In 2011 and 2010, the economy grew at the rate of 9.2 and 10.4 percent, respectively. The continuing crisis in Europe and the weak economy in the U.S. have hurt the demand for Chinese exports, which are the key drivers of the country's economy. Earlier, the International Monetary Fund had warned that an escalation of Europe's debt crisis could reduce China's economic growth by half for this year.