China's CPI up 5.5 pct in May

10:25, June 14, 2011      

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The consumer price index (CPI), the main gauge of inflation, rose 5.5 percent year-on-year in May, the highest rate in 34 months, the National Bureau of Statistics (NBS) said on Tuesday.

CPI rose 5.2 percent year-on-year in the first five months of the year, NBS spokesman Sheng Laiyun said.

The world's second largest economy "is still facing significant inflationary pressure," which will persist for a while, and the government must attach great importance to the issue, Sheng said.

"Inflation is elevated and will even rise to slightly above 6 percent in June, though the risk for inflation to get out of control is quite small," Lu Ting, an economist with the Bank of America-Merrill Lynch, said in an email note to clients.

According to NBS, food prices, which account for nearly a third of the basket of goods in the nation's CPI calculation, surged 11.7 percent in May from a year earlier. The pace of increase accelerated from April's 11.5-percent rise.

Growth in non-food prices also accelerated, rising by 2.9 percent in May from a year earlier, Sheng said. April's non-food prices increased 2.7 percent year-on-year.

"The steadily rising non-food prices suggest inflation could be sticky and structurally elevated (due to rising labor costs of migrant workers) at about 4 percent in the next several years," Lu said.

Compared with April, food prices slid 0.3 percent in May, of which vegetable prices plunged 9.3 percent month-on-month.

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