Official data shows that China’s annual inflation has rose sharply in the month of May. It is the highest data recorded in four months.
China’s is the world second-biggest economy and rising inflation in the country has become a cause of concern not only for China, but also for the world.
The Consumer Price Index (CPI) has increased by 2.5 percent according to the official data last month. According to the National Bureau of Statistics (NBS) this has accelerated by 1.8 percent in April. This figure was the highest, and in January a sharp rise of CPI by 2.5 percent was recorded.
The figure recorded for May also matched the figure which was projected by a poll of 15 economists in the Wall Street Journal. NBS stated that this rise is mainly caused due to increasing price of food, especially the 20 percent surge in the cost of fruits.
The Producer Price Index (PPI) is a measure that helps to determine cost of goods at the factory gate. It is also a leading indicator of changes in CPI. NBS has stated that the PPI has improved to a fall of 1.4 percent in May.
People’s Bank of China has declared the details of a cut in the amount of money to certain lenders must be maintained in the central bank, which is the reserve requirement ratio. This has been implemented as a part of limited surplus which will help to grow spending.
A market analyst stated that the inflation data confirms with their perspective that broader price pressures are steady and the concerns about deflation are triggered by a short-lived decline as headline inflation of April was overacted.