...China has no room to raise rates, lest the yuan appreciate too much against the Euro.
China’s inflation accelerated to the fastest pace in three years in July, limiting the scope for monetary easing to support growth as plunging stock markets signal the global recovery is weakening.
Consumer prices climbed 6.5 percent from a year earlier as food costs surged, reports from the Beijing-based National Bureau of Statistics showed today. That was more than the 6.4 percent median estimate in a Bloomberg News survey of 26 economists. In June, inflation was 6.4 percent.
Shanghai stocks extended losses after tumbling into a bear market yesterday on a widening European debt crisis and Standard & Poor’s downgrade of the U.S. debt rating. Elevated inflation shows that China is still dealing with the after-effects of an unprecedented monetary expansion during the last global slump and may have limited room for more stimulus.