China’s annual inflation hit a higher-than-expected 6.5% in July, putting the Chinese central bank in a bind as it tries to keep prices in check without dragging down the country’s economic growth.
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The unexpected pick-up kept inflation at its highest mark since June 2008.
Earlier, economists had expected inflation to dip to 6.3% after June’s reading of 6.4%.
China has acknowledged that inflation will exceed its annual target of 4% this year.
But with debt crises raging in the United States and Europe, China’s central bank is widely expected to hold interest rates steady.
Since October, China has raised interest rates five times and cash reserve requirements for banks nine times to combat quickening inflation.
But those measures haven’t been enough to cap price pressures.
Tuesday’s data showed food inflation at 14.8% from a year earlier, up from 14.4% in June.
Bottom line: China’s annual inflation rose for July as the central bank tries to keep prices in check without dragging down the country’s economy, Toshi Maeda reports.