The consumer price index (CPI), a key gauge of inflation, rose 2 percent year-on-year in August, accelerating from 1.8 percent in July, the National Bureau of Statistics said on September 9 (see page 34).

Food price hikes mainly drove the higher CPI growth, as heavy rains affected vegetable supplies and global grain prices went up.

Food prices, which account for nearly one third of the CPI basket, climbed 3.4 percent in August from a year earlier, while it grew 2.4 percent in July. Vegetable prices, in particular, jumped 23.8 percent year on year in August, while fruit prices surged 9.7 percent.

The base effect also contributed to the higher annual rate. CPI growth has gradually retreated since July last year when it hit a 37-month high of 6.5 percent.

The increasing inflationary pressure and weakening economic growth will place the central bank in a monetary policy quandary, said Guo Tianyong, a finance professor at the Central University of Finance and Economics.