Soaring CPI puts squeeze on manufacturers

But Liu stressed the importance of moving up the value chain to produce high-end competitively priced products, a win-win strategy for the domestic market. 

"Just like the success of the iPhone and iPad, consumers care less about the price because they are more trendy, novel, and functional. At the same time, the US government does a good job protecting intellectual property rights. If Chinese companies can produce such products, they won't have to worry about profit," Liu added. 

Amid the industrial transformation, experts are calling on the government to act to help domestic manufacturers, as outlined in the 36 articles the State Council released last year to encourage and guide private investment and expand the investment spectrum. 

A number of Asian countries are currently experiencing inflationary pressures as a result of rising food prices. Inflation is part and parcel of high growth, and China has sustained high levels of economic growth for more than two decades, said James Macdonald, head of China research at Savills. 

To offset the effects of inflation, individuals are deciding to invest in products that are deemed to move in step with inflation, such as real estate. 

As a result, real estate investment continued robust its growth and reached 1.87 trillion yuan ($288.55 billion) in the first five months of this year, up 34.6 percent from a year earlier, according to the NBS. 

Jing Ulrich, JP Morgan's managing director and chairman of global markets for China, predicted that the nation's CPI will continue to rise in June and July, but gradually fall below 5 percent from September.