The continued deviation between consumer and producer price indices is another thorny problem for policymakers, [Hong Kong company registration]especially the monetary authorities.

The consumer price index rose 2.4 percent year-on-year in April, up from 2.1 percent in March, according to the National Bureau of Statistics. The producer price index, on the other hand, fell by 2.6 percent in the same month, the 14th consecutive monthly fall. But the deviation is not surprising given the rising food and housing-related costs and the weak economic growth.

A 4 percent gain in food prices, up from 2.7 percent in March, has contributed to the consumer price rise, as the fall in meat prices as a result of the H7N9 flu outbreak has been offset by rising vegetable prices. Meanwhile, the policy-induced briskness in new house transactions has pushed up housing-related prices, another major component of the CPI basket.

At the same time, the weak economic growth and the slump in commodity prices on the international market have driven down factory-door prices.

There have been similar cycles in which the CPI and PPI growth trends deviate from each other, in late 1990s and early 2000s and during the 2008 global financial crisis. All were difficult times for the Chinese economy.

With consumer inflation edging up, there are few signs that the weak economic growth will improve any time soon. China's GDP growth fell short of expectations at 7.7 percent in the first quarter while its manufacturing activity index continued to dip in April. Policymakers can ease their monetary stance to stimulate the economy, but this will risk fanning consumer inflation and have other undesirable ramifications.[Set Up Company Hong Kong]

As major economies, such as Japan and the United States, have sought to ease their monetary pool, more countries have followed suit by cutting their interest rates recently, which makes it increasingly urgent for Chinese policymakers to take action; otherwise they will have to tackle the problem of capital inflows due to relatively high interest rates.

Any cut in China's interest rates, however, would further push up prices in the already red-hot real estate market. The rise in house prices will in turn exacerbate consumer price rises.

Given the complicated scenario,[Hong Kong Company Formation] China must tread carefully and maintain stable growth while preventing the potential risks from materializing.