Inflation in China Open Possibilities for Tighter Policies

Producer price inflation in China has reached figures higher than expected bringing the price close to six-year highs as price of steel and other raw materials surged while Consumer inflation climbed to a three-year high as fuel and food prices rallied on data released on Tuesday. Both prices producer and consumer are expected to reach 6.3 percent and 2.4 percent, respectively for this year.

Some analysts see this price inflation as a short-term rally with rally in the possibility for food prices to be seasonal. Moreover, the increase in price pressure in China has induced speculations of  tighter monetary policy this year to boost economic growth and mainly because of credit risks concerns including leverage in the market.