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CPI For Aquaculture Products Rises In May

Economics +1 more

CHINA - China's consumer inflation will increase in May, driven by higher food prices and a lower comparison basis, adding the possibility of an imminent interest rate hike, analysts have said.

The Consumer Price Index (CPI), a main gauge of inflation, will climb to 5.5 per cent in May from 5.3 per cent in April, said Qiao Hong, an economist from Goldman Sachs.

Rising food prices, particularly for pork, are the main reason for the predicted increase, she said.

Pork prices have been rising steadily since early May, as demand increased during the recent Dragon Boat Festival holiday.

Ms Hong expects food prices, which account for one-third of the CPI, to jump 12.1 per cent in May from a year ago, higher than the 11.5 per cent posted in April.

The China International Capital Corporation (CICC) also expects the CPI to rise to 5.5 per cent, reports Shanghai Securities News. A lingering drought in south China will push up prices of aquaculture products, and non-food prices will continue to stay high, the company said in a report.

With higher inflation, analysts expect an interest rate hike to occur in June.