Business

China inflation at 34-month high on rising food prices

  • 14 June 2011
  • From the section Business
Woman buying food from a stall in Beijing
Image caption The rise in food prices has hit a lot of Chinese shoppers in the pocket

Inflation in China hit its highest level in 34 months despite the government's 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.

Inflation is a particular concern in fast-growing economies across Asia. region.

In India, the wholesale price index of inflation rose faster than expected in May to 9.05%, caused partly by an increase in the cost of manufactured goods.

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