The Central Government is pushing the press notice that China's inflation is tamed.

inflation last month, was at 7.1% down from 7.7% in May. Li Xiao-Chao, a spokesman for the National Bureau of Statistics, said the economic results were hard-earned. The fall is in-line with analysts' expectations, and eases pressure on Beijing to either raise interest rates or take other more dramatic steps to cool sharp increases in consumer prices.

As Victor Shih at Elite Chinese Politics points out, there are a significant forces at work to oppose economic tightening in China, even to the point of pimping the notion of "acceptable inflation" or the fears of the bogeyman of short term stagflation if more restrictions are placed on monetary policy to dampen growth.

Given all of the unrealised inflation and untapped growth accumulated due to below market consumer energy price caps, I agree with Mr Shih that it's probably a better idea to check out the PRC's Producer Price Index, as it's slightly less affected by the money losing, energy sapping electricity and petrol price caps and volatile items like food which had pushed up the CPI early this year. Buried at the very end of an article on the half year PPI stats is this:

The PPI jumped 8.8 percent in June year on year, compared with 8.2 percent in May.

Now that's what we call taming the beast.