More bad news for investors in China. It's not enough that markets have been pummeled over the last six months, but any sign that we may see a recovery may be short lived, as April's inflation numbers were released.

According to an AP report: "Consumer prices in April were up 8.5 percent compared with the same month last year, the National Statistics Bureau reported. That was up from March's 8.3 percent rate and just short of February's 8.7 percent, the highest inflation in 12 years. Consumer prices have jumped since mid-2007, driven by rises in food costs that hit 22.1 percent in April. "

And this is the inflation number that's reported. We can only assume, with the government in full control, that inflation may well be even higher. It's important to note that the weakest, poorest members of society are most affected by the soaring inflation. Chinese officials are worried about demonstrations similar to the ones back in the '80s and in the 90's, especially as we countdown to the Olympics. But it may just be the Olympics that solve the problem. I would expect economic growth in China to wane after the Olympics are completed, as many government works and construction projects are set to finish in time for the games.

As China experiences slower growth, it might give consumers in China some relief from soaring prices.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no position in any stock mentioned, as of 5/12/08.