Focus on China's economic figures in July
|Graphic shows China's consumer price index (CPI) from 2010 to 2011, according to the National Bureau of Statistics of China on Aug. 9, 2011. (Xinhua/Lu Zhe)
BEIJING, Aug. 9 (Xinhua) -- China's inflation unexpectedly accelerated to a 37-month high in July, putting the government in a tough position as it faces the daunting task of taming prices and ensuring growth amid a faltering global economy.
The country's Consumer Price Index (CPI), a main gauge of inflation, surged 6.5 percent in July year-on-year, up from a three-year high of 6.4 percent 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 percent in July from a year ago. The price of pork, a staple food in China, soared by nearly 57 percent in July.
The Chinese government has made stabilizing prices a top priority in the second half.
To soak up liquidity, the central bank has ordered the nation's banks to set aside a record high of 21.5 percent of their cash in reserves and increased benchmark interest rates five times since October.
However, the government will be reluctant to tighten further given that the faltering global economy could impact on growth in China, said Liu Ligang, director of economic research department of ANZ Greater China.
The world's second-largest economy has shown signs of cooling down, with GDP decelerating to 9.5 percent in the second quarter from 9.6 percent in the first three months. Manufacturing growth also slowed to a 29-month low in July.