This is mainly due to higher food prices.
Bank of America Merrill Lynch (BofAML) reported a forecast of China’s inflation rate, which will grow from 1.6% in 2017 to 2.4% this year.
BofAML said that higher agricultural food prices will likely boost food inflation.
In particular, there will be higher vegetable prices due to adverse weather conditions, whilst higher grain costs will be due to a rise in fertilizer prices.
Pork supply will also be constrained because of a stricter environmental standards, which will push the prices up this year, and higher processed food and drink prices will be due to rising costs environment.
Non-food inflation will also increase because of electricity tariff hikes, which is expected to have 3% to 5% price hike, as well as higher inflation expectations.
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