2010-06-11 10:41

BEIJING: China's consumer price index (CPI), a main gauge of inflation, rose 3.1 percent year-on-year in May, the National Bureau of Statistics (NBS) announced here Friday.

The May figure was up 0.3 percentage points from April's rise of 2.8 percent. It also surpassed the central government's targeted 3 percent annual inflation limit.

In the first five months, China's CPI rose 2.5 percent year-on-year.

The producer price index (PPI), a major measure of inflation at the wholesale level, rose 7.1 percent year-on-year in May, up 0.3 percentage points from April's 6.8 percent.

In May, consumer prices in China's urban areas increased 2.9 percent and in rural regions by 3.3 percent. Food prices, which accounted for about a third of the weighting in calculating the CPI, rose 6.1 percent.

NBS spokesman Sheng Laiyun said the higher inflation was because of a low comparison basis from the same period last year and was pushed up by food prices hikes.

He said China had the basics for keeping prices under control this year.

"Although China faces quite a lot of pressure, the 3-percent target is still possible with effort," he said.

Lu Ting, China economist of the Bank of America-Merrill Lynch, said in an e-mailed note that China's rising inflation could be interpreted negatively by markets, and would be a risk for a few more months.

"We don't expect a knee-jerk reaction from policymakers: interest rates won't be hiked until the fourth quarter this year," he said.