July 22, 2024

Inflation in China Rose to 5.5% in May

Consumer prices rose 5.5 percent last month from the same period a year earlier, slightly more than analysts had expected, and markedly faster than the 5.3 percent increase in April, data from the national statistics bureau showed on Tuesday.

May industrial output and retail sales rose 13.3 percent and 16.9 percent, respectively, from May 2010, separate data showed. Both figures were below those recorded in April, showing that the government’s efforts to cool the Chinese economy’s sizzling pace of growth are taking effect.

“Today’s numbers provide further evidence that growth is moderating in response to recent policy measures, but at a very gradual pace, with little to suggest that Beijing needs to worry about a hard landing in coming months,” Brian Jackson, an emerging markets strategist at the Royal Bank of Canada in Hong Kong, wrote in a research note.

“This means that the near-term focus will remain on inflation,” he said, adding that Beijing is likely to nudge up interest rates further in coming months and allow the renminbi to rise more rapidly against the United States dollar as part of its efforts to curb higher prices.

The Chinese authorities are intensely sensitive to rising consumer costs and any social tensions that could be set off by soaring food and fuel prices. Beijing has announced a series of steps designed to slow economic growth and the inflation that has accompanied it.

However, with the rise in global commodities prices, pressure for higher wages and severe droughts in China this year also fanning inflation, analysts expect consumer prices to continue to gain for a few months before they level off later this year.

China’s inflation-fighting measures so far have included a series of steps to restrain lending by state-controlled banks over the past year, as well as four interest rates increases since October. Many analysts now are forecasting another rate increase of a quarter of a percentage point as soon as this month.

Article source: http://feeds.nytimes.com/click.phdo?i=16d5399914f8118215c2512edf9ad44f

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