China’s inflation rate rose by 5.3% during April

According to the Statistics Bureau in Beijing, the Consumer Price index of China inclined during April by 5.3% (Y-2-Y).

This inflation rate is above the expectations of China’s government target inflation rate of annual increase of 4%. At the current situation, this might cause the People Bank of China to take additional steps in trying to curb the current rise in inflation such as raising interest rate or raising reserve requirements ratio of commercial banks.

The chart below shows that despite the raises in loans and deposits interest rate, China’s inflation rate keeps on rising. This is due, in part, to the rise in crude oil prices during 2011.

China inflation rate and interest rate April 2011

If China will take further steps to slowdown the rising inflation, it might also adversely affect China’s economic growth and consequentially might reduce its demand growth for major commodities, including crude oil.


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