China's inflation rate fell to 7.7 per cent in May as against 8.5 per cent in April this year indicating that efforts to check price rise were yielding results, National Bureau of Statistics has said.
The Consumer Price Index, the barometer of prices, had reached 8.5 per cent in April which was very close to the 12-year monthly high of 8.7 per cent in February, despite a tight monetary policy and other measures to tame prices.
Food prices, accounting for over a third of CPI and the main driver of inflation, shot up by 19.9 per cent in May, 2.2 percentage points lower than the growth in April, NBS said.
Inflation identified as its 'biggest concern', government has stepped up supplies of grain, pork, staple meat and other food items and imposed price controls.
The CPI at 7.7 per cent was broadly in line with the forecasts but in excess of the 4.8 per cent annual target set by the government, state-run Xinhua news agency said.
The price of meat rose sharply by 37.8 per cent, while that of cooking oil rose 41.4 per cent. Besides price of vegetables rose by 10.3 per cent and grains by 8.6 per cent.
"The CPI growth rate has been declining, and the trend is expected to continue in the next few months," Zhang Liqun, a macro-economist with the Development Research Centre of the State Council or the cabinet was quoted as saying by Xinhua.
China still faced high inflationary pressure but it would improve as food prices had started declining, he said.
Government has vowed to maintain the CPI at 4.8 per cent this year, the same level as last year and said it would tighten monetary policy among a raft of measures.
China's central bank last week announced an increase in the proportion of funds banks must hold in reserve with it to a record high of 17.5 per cent in a move to rein in credit growth and inflation.
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