China's inflation accelerated in May to a 34-month high of 5.5 per cent, slightly above expectations, supporting the case for tighter monetary policy even as there are signs that economic growth is slowing down.

Bringing inflation under control is a top priority for China's leaders, who see little chance of the current slowdown from 2010 growth of more than 10 per cent turning into a hard landing.

Industrial output in May rose 13.3 per cent from a year earlier, just above expectations for an increase of 13.2 per cent. But the pace was the slowest since November and underlined other data suggesting the world's second-biggest economy is slowing down.

Analysts expect inflation to pick up again in June, some say to around 6 per cent, prompting the central bank to raise interest rates as soon as this month for the fifth time since October.

Analysts had expected inflation to be 5.4 per cent in May, a Reuters poll showed. Consumer prices rose 5.3 per cent in April from a year earlier.

Inflation has largely been fuelled by a rise in food prices, exacerbated of late by a severe drought in farming heartlands. Some economists say inflation is also the result of China's massive stimulus during the global financial crisis.

Like elsewhere, China is coping with a rise in global commodity prices, which are adding to inflationary concerns for policymakers.

China's central bank has already raised banks' required reserves eight times and lifted interest rates four times since October to quell inflation.

China's one-year lending rate is currently 6.31 per cent and its one-year deposit rate is 3.25 per cent.

The country's economy expanded in 2010 by 10.3 per cent, a pace that slowed in the first quarter to 9.7 per cent.

But data has suggested a further slowdown in the economy since then. Purchasing managers' surveys showed the factory sector expanded in May at it slowest pace in at least nine months.

Worryingly for financial markets, China's slowdown has occurred alongside a weakening of global growth as Europe struggles with its debt crisis and the United States contends with stubbornly high unemployment. An earthquake has knocked Japan into recession.

A raft of Chinese data released today was broadly in line with expectations. May retail sales rose 16.9 per cent from a year earlier, compared with expectations for an increase of 17 per cent.

Fixed-asset investment between January and May rose 25.8 per cent from a year earlier, against expectations for a rise of 25.2 per cent.

China's money growth slowed to a 30-month low in May and banks extended fewer new loans than expected, data released yesterday showed.