For example, the producer price of crude oil surged 26.6 per cent year-on-year in July, while petrol, kerosene and diesel climbed 25.4 per cent, 27 per cent and 21.2 per cent respectively in the month.

Strong demand also pushed up the purchase price of fuel, nonferrous metals and chemicals, which rallied 13.1 per cent, 37.2 per cent and 2.2 per cent respectively.

The PPI growth means that the prices of most of the raw materials, especially fuel and power, were still growing at a rapid pace, though some also reported a moderate decrease, said Zhu.

And this trend is likely to be maintained in the short term, he said, adding that this may require the authorities to come up with more tightening measures to cool down the economy.

Earlier this week, in a monetary policy report issued by the central bank, the authorities clearly stated its concern on the potential overheating of the economy, given the fast economic growth and strong investment desire in spite of the tightening policy.

It also said inflationary pressure is mounting.

China's economic growth reached 10.3 per cent in the first half of the year. The central bank report said growth is likely to slow down in the second half of the year but will remain fast.

Food prices may decline further due to sufficient supply and could further weigh down CPI growth in the coming months, but the prices of assets and services are still expected to rise, increasing inflationary pressures.

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