Inflation situation shows two widening gaps

At present, the inflation in China features two widening gaps.

First, the gap between the producer price index and the consumer price index has been widening. According to the National Bureau of Statistics, the PPI rose 9.0 percent in May from a year earlier, the fastest growth since 2008, while the CPI growth is still at a low level of 1.3 percent. And the core CPI growth is only 0.9 percent, as there are some moderation in service price inflations. So the gap between the PPI and the CPI last month reached 7.7 percentage points, which is a record high.

Second, the gap between the producer purchasing price index and the producer price index is continuously widening. So far this year, the former has been rising much faster than the latter. In May, compared with a year earlier, the producer purchasing price index rose 12.5 percent and the producer price index rose 9.0 percent, and the gap is 3.5 percentage points.