Wholesale inflation accelerates in May

By Dong Zhixin (chinadaily.com.cn)
Updated: 2008-06-11 10:46

The wholesale inflation in China accelerated to the highest level in more than three years on soaring energy prices, which may prompt more tightening measures from regulators.

The Producer Price Index (PPI), which measures the price of goods when they leave the factory, jumped 8.2 percent in May from a year earlier, up from 8.1 percent in April, the National Bureau of Statistics (NBS) said in a statement on its website.

Jumps in energy prices were the culprit for the price hike. Crude oil soared 30.9 percent last month over a year earlier, while coal prices increased 24.1 percent year-on-year, the NBS statement said.

The PPI was believed to be a key leading indicator of the Consumer Price Index (CPI), which measures the overall price level consumers pay for a basket of products. China's consumer inflation is running at decade high, rising 8.5 percent in April.

Experts expect the May figures to fall below 8 percent and gradually moderate in the coming months. However, the spike in the PPI suggested the fight against inflation remains a key task for regulators.

China's central bank raised commercial bank's reserve requirement by one percentage point during the weekend to a record 17.5 percent, a harsher than expected rise than the usual 50 basis-point increase.

That also marked the 15th hikes in the ratio of deposits banks must park with the central bank as reserves.

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