China’s central bank raised it’s inter-bank lending rate, showing worries about inflation pressure in the economy. The graph below from new order PMI clearly demonstrates the pressure has built up in most sectors.
One of the areas of concern in China’s PMI report was the rise of input prices by 3.3 points to 66.7. This is an indicator of rising inflationary pressures. This, coupled with the rise in food prices, should be monitored closely in the coming months.