China inflation accelerates to 3.1% in May

China’s consumer price inflation accelerated to 3.1% in May from 2.8% the previous month, the Wall Street Journal reported. The jump in the consumer price index (CPI) was driven primarily by a 6.1% increase in food prices, compared to 5.8% in April. Economists don’t expect Beijing to respond by fast tracking an interest rate hike as inflationary pressure is likely to ease in the second half of the year. The producer price index (PPI) increased 7.1% in May compared to 6.8% in April. The CPI and PPI for the first five months of the year are 2.5% and 5.9% respectively. Other indicators suggest that economic growth is moderating. Industrial output rose 16.5%, down from 17.8% in April, while fixed-asset investment for January-May was 25.9%, slower than the 26.1% seen in January-April. Retail sales growth accelerated to 18.7% from 18.5% in April. The People’s Bank of China said total new bank lending came to US$93.6 billion in May, down from US$113.3 billion in April, while broad money supply eased to 21% from 21.48% the previous month.