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China’s inflation hit a three-year high of 6.4 per cent as food inflation jumped to 14.4 per cent, raising concerns over the impact it will have on salaried classes, the mainstay of China’s population.
China’s consumer price index (CPI), the main gauge of inflation, rose 6.4 per cent year-on-year in June, the highest level since June 2008, the National Bureau of Statistics (NBS) said today.
Of the 6.4 per cent CPI growth in June, 3.7 percentage points were contributed by the carryover effect of price increases last year, the NBS said.
Food prices, which account for nearly one third of the basket of goods in the nation’s CPI calculation, jumped 14.4 per cent in June from the same month last year, a pace faster than May’s 11.7 per cent.
Growth in non-food prices also accelerated to three per cent in June up from 2.9 per cent in May.
An adverse impact on food and real estate prices could cause unrest among the middle and lower middle classes in the country, whose salaries are in the margins.
In terms of regions, the CPI rose 6.2 per cent year-on-year in China’s urban areas and the growth in the rural areas was 7.0 per cent, according to the NBS.
On a month-on-month basis, food prices added 0.9 per cent from May, with the pork prices jumping 11.4 per cent from May.
Month-on-month price decline was reported in vegetables and fruits. Non-food prices were flat in June compared with May.
“We don’t have to panic about the June CPI figure,” Mr Zhang Liqun, a macroeconomic analyst with the State Council Development Research Centre, China’s top government think-tank said.
“A CPI growth above 6 per cent does not mean the inflation situation is worsening in China, because 3.7 percentage points of the increase were contributed by the carryover effect,” Mr Zhang told the state-run Xinhua.
He said the carryover effect peaked in June and new factors that push up prices have been under the government’s control.
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