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Chinese inflation still high


Chinese inflation still high


China’s consumer price inflation continues to accelerate. In April it remained close to its highest in twelve years.

Compared with the same month last year, inflation was up 8.5%, from 8.3% in March and close to the 8.7% it hit in February.

Food prices are the overwhelming driver of inflation. They rose 22% in April, but the latest figures show they dipped slightly in May.

China’s inflation rate is currently the fastest of the world ten largest economies. Last year it averaged just 4.5% and the year before that a mere 1.7% .

Chinese banking authorities reacted to the inflation rate by raising the amount of money banks must keep in reserve. The Beijing government had declared that it would tighten monetary policy this year to fight inflation, but it has yet to raise interest rates after six increases last year.

China’s record trade surpluses have brought a torrent of money gushing into the country threatening to push inflation still higher, though the global economic downturn may change that.

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