BEIJING—China's premier, Wen Jiabao, warned last month that inflation is like a tiger—once unleashed, it is "very hard to cage again."

Yet Beijing has been slow to pounce, even though food prices are rising at a nearly 12% annual clip and overall inflation hit 5.4% in March, according to numbers released Friday, more than twice the pace of a year ago. The steps it has taken thus far, including last week's 0.25% interest-rate increase, have been modest.

If...