Beijing: China’s inflation rate accelerated to a 37-month-high of 6.5 per cent in July on surging food costs, while its Producer Price Index (PPI), a major measure of inflation at the wholesale level, rose by 7.5 points around the same amid deepening worries over the downgrade of US debt.
Inflation rose to 6.5 per cent on surging food costs, putting the government in a tough position, with worsening global liquidity in sight.
China’s Consumer Price Index (CPI), a main gauge of inflation, surged by 6.5 per cent in July year-on-year, up from a three-year high of 6.4 per cent in June, the National Bureau of Statistics (NBS) said on Tuesday.
The stubbornly high inflation rate has been driven by increasing food costs, which rose by 14.8 per cent in July from a year ago.
The price of pork, a staple food in China, soared by nearly 57 per cent in July, prompting government to step in with host of incentives for pig farms.
On a month-on-month basis, the CPI increased by 0.5 per cent over that of June.
The Producer Price Index, which is used to calculate inflation at the wholesale level, jumped 7.5 per cent year-on-year in July.
July’s PPI growth was even greater than June’s 7.1 per cent increase, the NBS said in a statement on its website. Producer purchase prices rose by 11 per cent year-on-year in July, but rose by just 0. 1 per cent on a month-on-month basis, according to the NBS.
Prices of production materials in July rose 8.4 per cent year-on-year, but remained flat on a month-on-month basis, Xinhua news agency reported.
The new data came in the midst of growing concerns in China over the downgrade of US long term debt, in which China has big stakes as the largest creditor.
China holds about USD 1.6 trillion worth of US debt, amounting to about 26 per cent of the total debt.
According to some estimates, it is even closer to USD 2 trillion.
The downgrade of the US debt from AAA to AA-plus by credit ratings agency Standard & Poor’s has triggered strong concerns over the likely losses China may suffer if the crisis in the US economy continues. (PTI)