Inflation higher than predicted

The faster-than-expected growth of the Consumer Price Index in June was due to a lower base from a year earlier, said economists, pointing out that inflation was "stable".

Last month, the CPI, a key inflation gauge, increased 2.7 percent year-on-year from 2.1 percent in May.

This was higher than the predicted 2.6 percent, according to the National Bureau of Statistics.

Fruit and vegetable prices decreased but pork prices went up by 4.6 percent, said Yu Qiumei, a senior economist at the NBS.

The NBS also reported that the Producer Price Index was a negative 2.7 percent in June, compared with a negative 2.87 percent in May.

Guan Qingyou, deputy head of the Research Institution of Minsheng Securities Co, said that food prices may come under pressure.

"The PPI will hardly to turn positive in the next two quarters, as investment and industrial production will remain weak when liquidity and monetary policy are tight," Guan said.

Qu Hongbin, chief China economist at HSBC, said that moderate inflation has reflected sluggish demand.

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