Chinese inflation hits 34-month high

| June 14, 2011 | 0 Comments

Inflation in the world’s second largest economy reached the highest level in 34 months in May as food prices continue to rise.

Consumer prices rose by 5.5% in May on an annual basis – higher than expectations of an annual rate of 5.3%.

Food prices (the primary factor behind stubbornly high inflation) remain high, rising at an annual rate of 11.7%.

Economists have warned that inflation could rise further with many predicting a rate of 6% next month, despite Government attempts to rein in prices.

Since October, interest rates have been lifted four times. Many other central banks in Asia have adopted the same measures due to stubbornly high inflation.

The central bank’s one year lending rate is 6.31% and one year deposit rate is 3.25%.

It is expected that the central bank will raise interest rates again next week.

In other news today, Chinese industrial output grew 13.3% on an annual basis last month – slightly above forecasts of a 13.2% rise.

However, it represented the slowest growth since November and reflects other data which suggests the economy is cooling.

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