China's inflation rises on increase in food costs and housing index.

China's inflation soared higher in April as the consumer price index (CPI) touched 2.8 per cent, and PPI increased to 6.8 per cent, resulting in stocks falling on fears of government tightening up of credit offtake.

The rise in CPI defeats the Chinese government's goal of keeping inflation below 3 per cent per year, as industrial products price rise translates into commodities for daily use.

The food cost rose sharply in April, vegetables was up 14.9 per cent and that of fruit up 16.4 per cent.

Food price index rose 5.9 per cent, up from 5.2 per cent in March, the National Bureau of Statistics, reported today.

To curtail the prices from going up which deceases the consumers' purchase ability, some economists have put forwarded raising the benchmark interest rates by central bank thereby allowing it to achieve its goal of keeping inflation below 3 per cent for 2010.

The bellwether one-year savings rate has maintained at 2.25 per cent from late 2008, mainly on exceptionally loose monetary policy adopted by China to restrain a global slowdown.