BEIJING, June 13 -- China's inflation remains low, with the consumer price index (CPI) a major inflationary barometer rising 1.4 per cent in May year-on-year.

That was according to the National Bureau of Statistics yesterday.

The figure compared to a 1.2 per cent CPI growth in April.

Analysts attributed the slightly faster growth to price hikes of crude oil, fuel and food, but said that the country's inflationary pressure in general was restrained.

"The 1.4 per cent CPI growth is just what we expected," said Wang Yuanhong, an economist with the State Information Centre, a government think-tank.

A lot of the rising prices last month were caused by higher food prices, which climbed 1.9 per cent in the month compared to the same month last year.

Vegetable prices reported 14.6 per cent growth last month. Higher fuel, water, electricity and public transportation expenses also helped prop up CPI growth.

However, the price of meat and eggs dropped by 9.3 per cent and 14.1 per cent last month respectively. And the price of telecommunications equipment also declined by 17.9 per cent.

Wang said a targeted 2 per cent CPI growth for this year will probably be reached, but the authorities still have to pay close attention to the price movements of oil and bulk commodities in the coming months.

Meanwhile, real estate investment is still being monitored.

It will take time to see the impact of the central bank's measures to curb excessive investment and lending and work out whether further interest rate hikes are necessary, said Wang.

The People's Bank of China, China's central bank, had warned of the rapid growth of investments and lending in the first quarter in its quarterly monetary policy report.

It raised its benchmark lending rate on April 28 to cool lending for investment projects.

Liang Hong, China economist at Goldman Sachs Asia, said the tightening measures adopted so far are likely to help slow down excessive credit and activity expansion, at least in the near term.

Liang said policy-makers are likely to pause for an observation period of at least three months to evaluate the impact of the recent tightening measures before making any further moves, but investment growth is still expected to remain robust over the next three to six months.

China's retail sales rose 13.6 per cent in April on a year-on-year basis, the fastest in a year.

(Source: China Daily)