China’s producer price inflation (PPI) has reached a near-six year high in January, adding to mounting price pressures in the country.

China’s National Bureau of Statistics (NBS) reported that PPI went up by 6.9 percent from a year earlier, the largest annual increase since August 2011. This is well above the expected 6.3 percent increase.

The rise in PPI was driven by a 31 percent increase in mining extraction costs as coal prices rise, the biggest jump in this category since early 2010.

The country’s massive imports of coal and other industrial materials have contributed to a sharp rebound in global resources prices over the past few months, boosting profits and processors.

Price gains in China have been amplified by government efforts to reduce industrial overcapacity.

In addition, producer prices increased by 0.8 percent, in part due to higher food and travel costs around the Lunar New Year holiday, which took place at the end of January.

Spending during Lunar New Year is always high. In 2014 around 610 billion yuan—about $100bn was spend over the holiday, about double the amount spent by US shoppers over the Thanksgiving weekend in 2015.

There was also a rise in consumer inflation to 2.5 percent, the fastest increase since May 2014.

As a result, China’s central bank raised short-term interest rates in recent weeks as a way to contain risks from an explosive growth in debt.

According to some of the country’s newspapers, banks in some of the larger cities have started to reduce discounts on mortgage rates for first-time buyers, as a way to curb financial risks.

Analysts told Reuters that these high rates of inflation are not expected to last.

Capital Economics China economist Julian Evans-Pritchard said:

3 Things That Will Change the World Today

“Tighter monetary policy, slowing income growth and cooling property prices should keep broader price pressure contained over the medium-term.”

Inflation in the UK

Over in the UK, inflation has reached its highest for the past two years.

The Office for National Statistics (ONS) reported that annual inflation as measured by the Consumer Prices Index (CPI) reached 1.8 percent in January, up from a rate of 1.6 percent in December.

ONS’s head of inflation Mike Prestwood said in a statement:

“The latest rise in CPI was mainly due to rising petrol and diesel prices, along with a significant slowdown in the fall in food prices. The costs of raw materials and goods leaving factories both rose significantly, mainly thanks to higher oil prices and the weakened pound.

 

“Both house prices and rents continue to grow over the year but with some signs of a slowdown in recent months.”

Inflation has risen for the past four consecutive months, bringing it closer to the Bank of England’s target rate of two percent. This is only set to increase as a result of the weaker pound, which means imported goods will become more expensive.