Inflation hits three-year high; triggers RRR hike

China’s consumer price inflation hit 5.5% in May, the highest rate in almost three years, the Wall Street Journal reported. The figure is slightly higher than March’s reading of 5.4%. The rise prompted China’s central bank to raise the required reserve ratio for the nation’s largest banks by 0.5% to 21.5%. The decision to raise the reserve ratio – as opposed to the more common monetary tool of hiking interest rates – may be more political than economic. “It reflects the fact that the PBoC doesn’t own the interest-rate decision,” said Wei Yao, an economist with Societe Generale. Statistics released on Tuesday also showed that growth in industrial production slowed to 13.3% year-on-year in May, down from 13.4% in April.