CHINA'S industrial companies reported slower growth of profit in March as rising production costs continued to erode their net income.

Their profit expanded 32 percent year-on-year to 1.06 trillion yuan (US$162.5 billion) in the first quarter, slower than the pace of 34.3 percent between January and February, the National Bureau of Statistics said today.

"Higher prices of raw materials are blamed for less profit growth in the past months," said Li Maoyu, an analyst at the Changjiang Securities Co. "Also, China plans to accelerate its economic restructuring and promote green development. That will cost the profit of some manufacturers in the future."

Raw materials such as crude oil, coal and cotton are traded at higher prices on the global market. As a result, China's Producer Price Index, the factory-gate gauge of inflation, climbed 7.3 percent from a year earlier in March, while the reading for the first quarter stood at a steady 7.1 percent.