China's May inflation rises to 2.1 per cent amid concern about strength of recovery

BEIJING, China – China’s inflation rate rose slightly in May amid concern about the strength of the country’s economic recovery.

Consumer prices rose 2.1 per cent over a year earlier, according to data from the National Bureau of Statistics on Sunday. That is down from April’s 2.4 per cent and well below the government’s target of 3.5 per cent for the year.

The slowdown in growth was attributed mainly to a decline in vegetable prices, which fell 13.8 per cent in May from the previous month.

Wholesale prices fell 2.9 per cent in May compared with a year earlier, accelerating their decline.

Inflation is forecast to rise gradually as a shaky economic recovery boosts consumer demand. But mixed signals about factory activity, which slowed in April, and doubts about the strength of trade have raised questions about whether the recovery is gaining traction.

The world’s second-largest economy is limping out of its deepest slump since the 2008 global crisis. Growth unexpectedly declined to 7.7 per cent in the first three months of this year from 7.9 per cent the previous quarter. Analysts say the economy is being shored up by state-led investment and bank lending, and could be vulnerable if trade or investment weakens.