The consumer price index, China's main gauge of inflation, for March rose 2.1 percent year-on-year, down sharply from a 10-month high of 3.2 percent in February, the National Bureau of Statistics said.
The bureau attributed the March improvement to lower food prices. Food prices, an important gauge which accounts for a third in the CPI calculation, grew 2.7 percent year-on-year in March, compared to 6 percent in February.
The March CPI numbers were below experts' estimate of 2.5 percent, the official Xinhua News Agency reported.
Wang Jun, an economist with the China Center for International Economic Exchanges, said mild inflation in the first quarter lays a good foundation for achieving this year's inflation control target, Xinhua reported.
The new government led by President Xi Jinping, described as a reformist, has planned to hold this year's consumer inflation at around 3.5 percent.
Wang said China is maintaining a prudent monetary policy this year and that should help check any intense inflationary pressure in the first half of this year.
Liu Ligang, an economist with ANZ National Bank Ltd., said the recent outbreak of the H7N9 avian influenza virus will weaken demand for meat products, which will help ease inflationary pressure in the next few months, Xinhua reported. Of the 24 people infected so far by the newly discovered flu strain, seven have died.
Liu said the sharp decline in inflation also means the central bank is less likely to tighten policies in the coming months.
"As China is experiencing a sound employment rate and a normal level of inflation at present, maintaining the current intensity of the current policies is advisable," Wang said.