The World Bank warned of sharply higher inflation in China as risks of inflationary spillover from food into wages and the wider economy become clearer, Reuters reported. In a quarterly report, the organization forecast 7% consumer price inflation for the year, the highest number since 1996, and up from the 4.6% projection it had made in February. However, the World Bank also increased its projection for GDP growth to 9.8% from 9.6% due to the strength of China’s service sector. In its report, the bank criticized Beijing’s implementation of monetary policy, noting that credit controls and increasing banks’ reserve requirement ratios hamper the development of the banking system.
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