China's National Bureau of Statistics announced that May inflation rose as the nation's consumer price index (CPI) moved higher by 3.1% compared to the same month last year. The figure was up from April's 2.8% increase and surpassed the government's 3% upper-limit target for annual inflation.
Many experts believe that the central government will have to raise interest rates to cool financial activity and increases in real estate prices. Food costs rose by 6.1% and wholesale inflation was up 7.1%, which means higher costs may have to be passed on to China's consumers and trade partners. There is no guarantee that this transfer will work, which could cut into margins at China's manufacturers.
Industrial output in the world's most populous nation slowed to 16.5% in May from 17.8% in April.
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