China Inflation at 34 Month High

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As reported by the BBC.

Inflation in China hit its highest
level in 34 months despite the government efforts to rein in rising prices.

Consumer prices in China rose by 5.5% in May, compared with the same month
last year, according
to the National Bureau of Statistics
.

Food prices continued to be the biggest factor as they surged by 11.7%

The rising cost of food and commodities have pushed up the cost of living and
become a hot political issue in China.

Analysts warned that prices are likely to rise even further.

“For now, it seems certain that China’s CPI will hit 6% in June,” said Xu
Biao of China Merchants Bank.

Rate rise

Chinese authorities have said that fighting rising prices is a top priority
for them.

It has set a target of keeping the inflation rate at 4% for the year.

The country’s central bank has raised interest rates four times since October
last year, in an effort to curb lending and rein in rising prices.

Analysts said that the latest data is likely to force the bank to raise the
cost of borrowing once again.

“CPI reached a new record, increasing concerns of another interest rate
rise,” said Xian Fang Ren of IHS Global Insight

“We expect the central bank to raise interest rates next week,” Mr Ren added.

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