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China's National Bureau of Statistics has released inflation figures for June. The country's inflation rate has now reached 6.4 percent. It's the highest figure for three years. The rate is driven by an increase in food and housing prices.
In China, the Consumer Price Index—one of the measures of inflation—has risen to 6.4 percent. That's according to figures released by the bureau of National Statistics for the month of June.
The June figure is an increase on the already high 5.5 percent figure for May and well above Beijing's annual target of 4 percent. The last time inflation was higher was three years ago, when it hit 7.1 percent.
Inflation is a politically sensitive issue for the Chinese regime. The current inflation rate is being driven by rising food prices. This increase hits low-income earners especially hard and authorities fear it could trigger social unrest.
[Wang Yuanhong, Researcher, Economic Forecast Dep. of State Info. Center]:
"Prices of food, as represented by pork, were the principal pusher of the CPI increase... though non-food prices have also somewhat increased, they were rising at a much lower speed than food and housing."
Authorities have taken economic measures to rein in inflation. Last week the central bank raised interest rates for the third time this year.
Some fear excessive tightening of monetary policy could lead to a slowdown in economic growth. China's growth rate has decreased from 9.8 percent in the last quarter of 2010, to 9.7 percent in the first quarter of 2011. Manufacturing growth almost stopped in June and auto-sales have been decreasing for two months.