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May PPI, CPI hit as US tariffs, food prices rise

A Chinese customer is resting in a shop in a shopping district in central Beijing on January 20, 2015.

Kevin Frayer | Stringer | Getty Images

China's consumer price inflation rose to its highest level in 15 months in May as food prices rose on persistently high pork prices, according to National Bureau of Statistics data released Wednesday.

Consumer Price Index (CPI) in May rose 2.7% yoy, its highest level since February last year, and was in line with expectations of Reuters surveyed economists.

Food prices rose 7.7% yoy in May, while non-food prices rose 1

.7% yoy. In particular, the prices for fresh fruit rose by 26.7% in May compared to the previous year due to the weather. They rose 14.8% from April.

China's pork prices remained high this year as African swine fever hit the herds of pigs in the country. According to Statistics Office, pig prices rose in May by 18.2% compared to the same month last year.

While Chinese guests, who account for half of the world's pork consumption, may be upset by higher prices, there is no reason to worry about further market panic, said Bo Zhuang, chief economist at TS Lombard in China.

"The price of Chinese pork has been on a roller coaster for a decade," Zhuang told CNBC.

The Chinese government said earlier this year that Chinese pork prices are expected to rise more than 70% over the previous year.

] However, this scenario is not uncommon as pork prices rose 50% to 60% a few years ago and consumers are simply switching to other meats such as chicken, beef or button, Zhuang said.

Meanwhile, producer prices rose. Inflation (PPI) – a measure of industrial profitability – rose as expected in May by 0.6% yoy.

The most recent economic data came in the context of a trade battle between the two largest economies in the world.

So far, the US has levied tariffs on Chinese products worth $ 250 billion, while Beijing has paid US $ 110 billion worth of American goods. President Donald Trump has threatened to impose separate tariffs on Chinese goods worth more than $ 300 billion, which are currently not taxed.

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