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Beijing, China (AHN) – Inflation in China is running at a 34-month high fueled by increases in food prices that are hitting consumers hard there despite efforts by the government to curb the rise.

A sharp increase of 11.7 percent for food prices led the increase in the consumer price index.

Chinese consumers saw prices rise by 5.5 percent in May compared to the same month a year ago, National Bureau of Statistics officials announced Tuesday.

In addition, analysts do not see an end in sight any time soon and forecast a CPI increase of 6 percent for June.

Chinese authorities have set a target of 4 percent inflation rate for the year, but the May figures pushed that to 5.2 percent on an annual basis so far.

The central bank is expected to raise interest rates again to try to achieve the 4 percent annual inflation rate goal for the year. However, the central bank has already raised interest rates four times since October in an effort to cut lending and rein in inflation.

Food prices account for one-third of the CPI. The 11.7 percent increase in May compared to a year earlier came on top of an increase of 11.5 percent in April from the same period in 2010.

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London, United Kingdom (AHN) – Retail sales rose by 0.9 percent in April compared to March in the 17 nations that use the euro, according to statistics office Eurostat.

That increase was more than analysts expected, particularly with the ongoing debt crisis in many nations as well as increases in interest rates.

In March, sales had dropped by 0.9 percent from February.

Even one country that received bail-out funds saw increases in retail sales with Portugal reporting a 2.9 percent growth in sales, although that was below the 4 percent increase it registered for the same month in 2010. However, the bailed out nation of Ireland saw a drop of 0.5 percent in its retail sales figures while Greece has not yet reported its figures.

Among the largest economies in the eurozone, France reported a hefty 1.4 percent rise in sales while Germany reported a less robust 0.6 percent rise in retail sales.

In the meantime, Great Britain, which does not use the euro, saw mixed retail sales reports.

While the nation as a whole has flat growth and expects to continue that way for the next year, retail sales in London are expected to show 1.5 percent growth for the coming year.

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Detroit, MI, United States (AHN) – Chrysler Group has apparently recovered from the slump that hit the auto industry in 2008. With the carmaker’s start of recovery, the company will repay on May 24 the $7.5 billion it borrowed from the U.S. and Canadian governments to further improve its bottom line.

The loans were part of the bankruptcy restructuring that the two governments extended to Chrysler and General Motors when the U.S. car industry was about to collapse from weak sales.

The repayment of the loans is a condition for new Chrysler operator, Fiat, to increase its stake in the American car manufacturing firm to 46 percent from 30 percent.

To repay Washington and Ottawa, Chrysler will use $3.5 billion in bonds, a $2.5 billion term loan and $1.3 billion in cash from Fiat.

Last month, Chrysler announced it would repay the two governments its loan by the end of June. After the announcement, Chrysler and Fiat Chief Executive and Chrysler Chief Financial officer Richard Palmer sought potential lenders, which would offer lower interest rates.

Marchionne attributed the company’s deficit to the interest payments it made on the government loans. In 2010, Chrysler reported a $652 million loss, partly because of $1.23 billion interests it paid on the bailout loans.

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Beijing, China (AHN) – Tightening measures by Beijing have helped to ease China’s inflation rate but not to contain it and officials warn that inflation now is spreading beyond food prices.

China’s central bank has increased interest rates by a quarter-point every two months. That resulted in slowing down inflation in consumer prices, but it did not contain the increases.

Rising prices for food, fuel and housing were all identified as serious problems causing the economy to overheat and result in double-digit inflation rates.

On the other hand, rising wages have helped to fuel consumer demand for those items.

China’s 11.2 percent annual inflation rate is down from 11.7 percent last month.

For now, observers expect the central bank to continue to raise interest rates and allow the yuan to appreciate in value against the dollar. That would result in lowering prices Chinese consumers pay for imported items such as fuel and food.

However, Chinese government officials have been opposed to allowing the yuan to appreciate because doing so would increase the prices of China’s exports to other countries.

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Frankfurt, Germany (AHN) – Inflation in the eurozone rose slightly in April to 2.8, percent up from 2.7 percent in March according to data from Eurostat.

Higher energy costs and the cost of raw materials were blamed for pushing the inflation rate upward.

European Central Bank officials have set a target inflation rate of just below 2 percent, so the April rate was a disappointment. In addition, the higher rate of inflation will create pressure on the ECB to raise its interest rates.

There are 17 participating member states in the euro area. Those states are Belgium, Germany, Estonia, Ireland, Greece, Spain, France, Italy, Cyprus, Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia, Slovakia and Finland.

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DHAKA, Bangladesh (IRIN) – Lack of regulation and a surplus of donor funds in Bangladesh’s microcredit industry have led to NGOs pushing loans to over-indebted borrowers, says BRAC, the world’s largest development organization and heavily involved in the country’s microfinance industry.

Asked whether BRAC itself had pushed loans onto borrowers who could not afford them, Shameran Abed, programme head of microfinance at BRAC, told IRIN: “Yes,” citing “excess liquidity” and a lack of communication between lenders.

“In the mid 2000s, the microfinancing industry grew too fast. And yes, we did,” said Abed. “But I’ll tell you why we did – we didn’t have perfect information.”

In 2009, BRAC disbursed US$1.1 billion worth of loans to women throughout Bangladesh, and like many other microfinance institutions (MFIs), claimed that 99 percent of their borrowers paid back their loans, a win-win situation.

However, the industry has also come into disrepute. A Norwegian documentary, Caught in Micro Debt, sparked international outrage in 2010 by showing the difficulties people have under the burden of paying back a loan.

Some borrowers are even taking out more loans to meet repayments, experts say.

Microcredit, the practice of loaning sums as small as US$20, was first pioneered in Bangladesh in the 70s and 80s by Nobel laureate and politically controversial figure Mohammad Yunus and the organization he founded, Grameen Bank.

Since then, the industry has mushroomed to over 500 registered MFIs in Bangladesh and has come under increasing scrutiny.

Women, who are the borrowers in most cases, are subject to high interest rates and aggressive debt recovery techniques, said Lamia Karim, associate professor of anthropology at the University of Oregon. She has been researching microfinance for more than 15 years.

But BRAC’s Abed said the popular belief that high interest rates are to blame for loan defaulting is wrong. The interest on a $140 loan, he explained, is 15 percent, with weekly installments of $3.40, of which about $0.40 is interest.

“Is that 30 taka [US $0.40] tipping you over the edge? I don’t think so,” he said.

Inadequate regulatory body

Despite having more than 20 million micro-borrowers, the Bangladesh government still has no effective system in place to protect microcredit lenders and clients, experts agree.

The Microcredit Regulatory Authority (MRA), formed in 2006 after repetitive calls from the microcredit industry to establish control over smaller MFIs, is hamstrung by a lack of manpower and funds, according Prodip Chandra Roy, MRA assistant director of research.

Furthermore, Roy said the MRA’s authority is severely undermined by other organizations that offer registration.

“For us the biggest challenge is to control other authorities that also have the authority to register microfinance organizations,” he said.

To register with the MRA, an MFI has to show either that it has 1,000 members (potential borrowers), or $50,000-worth of dispersible funds. To date, the MRA has registered some 548 MFIs out of thousands operating in Bangladesh.

Strong-arm tactics

Many microcredit borrowers have little or no property to be used as collateral, which makes trust a key element of the loaning process.

“For our microfinance borrowers we do not have any collateral, so we cannot take anything back. The court system doesn’t work here. So, the only way you can get your money back is to keep pestering them,” Abed said.

However, BRAC, Grameen and other NGOs have been found to do much more than pester borrowers who missed payments, some claims suggest.

As an attack on a family’s honour, women are regularly shamed in public, an activity that can have grave social repercussions, Karim said.

Stronger measures are used if the borrowers default even after public humiliation.

“Grameen, BRAC, ASA and Proshika all strong-armed women into paying back. In extreme cases homesteads are taken apart and the timber and tin sold off,” said Karim.

Though the NGOs don’t actively take part in `ghar bhanga’ (house-breaking), community members do what NGO officers order them to do, out of fear of losing access to loans, she said.

However, despite numerous papers by independent researchers, the NGO community refuses to accept such allegations.

“I’ve not had one issue of complaints [of house-breaking] coming from borrowers, or the media or the society that we work in,” said Abed.

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– Provided by Integrated Regional Information Networks.

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New York, NY, United States (AHN) – Mortgage rates showed a rise this week, with a 30-year fixed mortgage rate rising to 5.08 percent.

According to Bankrate.com’s national survey the average 30-year fixed mortgage has an average of 0.41 discount and origination points.

The average 15-year fixed mortgage inched to 4.27 percent, and the larger jumbo 30-year fixed rate moved up to 5.57 percent. Adjustable rate mortgages dropped a few points this week. The average 5-year ARM slipping to 3.87 percent and the 7-year ARM fell to 4.21 percent.

Analysts believe investors looked past global concerns and based their decisions on a better-than-expected jobs report. The employment news validated other improving economic data and interest rates moved higher in response.

Mortgage rates are closely linked to yields on long-term government bonds.

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