Higher inflation in China sparks fear of rate hikes

Julian Harris
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BRENT crude slipped yesterday, partly due to higher than expected inflation in China, the world’s second-largest oil user.

Chinese consumer price inflation slipped in April, yet came in above expectations at 5.3 per cent – rekindling concern that Beijing’s efforts to cool the economy would erode energy demand.

China’s soaring trade surplus, reaching $11.4bn (£6.97bn) in April, had already stoked expectations of upcoming monetary tightening.

“With CPI coming in higher than expected again today, I think that inflation concerns will continue to plague risk appetite,” said a head trader at Hong Kong-based broker.

Meanwhile, China’s industrial production climbed 13.4 per cent year-on-year in April, a slight slowdown from March’s 14.8 per cent growth.