UPDATE 1-China inflation picks up, limits room for policy easing
* June CPI +2.7 pct yr/yr vs f'cast +2.5 pct
* June PPI -2.7 yr/yr vs f'cast -2.7 pct
* C.bank seen keeping policy stance neutral
BEIJING, July 9 (Reuters) - China's annual consumer inflation accelerated more than expected in June as food costs soared, data showed on Tuesday, limiting room for the People's Bank of China to loosen policy to underpin the slowing economy.
The central bank is seen keeping policy largely neutral in the near term to balance the need to keep the world's second-largest economy on an even keel while warding off consumer inflation as well as possible property bubbles, analysts say.
"The price pressure for food items came back a little bit. It will be more difficult for them to ease policy, especially to cut interest rates," said Kevin Lai, an economist at Daiwa in Hong Kong.
"It reduces the likelihood of interest rate cuts this year and that is not a good policy background to have. But I think inflation will ease by the end of the year as demand won't be strong."
The central bank allowed short-term interbank borrowing costs to spike to close to 30 percent on June 20, a blunt warning to overstretched lenders that they must bring risky lending under control.
The National Bureau of Statistics said that annual consumer inflation quickened to 2.7 percent in June from May's 2.1 percent, overshooting market expectations.
The headline inflation number is still below the government's target of 3.5 percent and also below the benchmark one-year deposit rate of 3 percent.
Month-on-month, consumer prices were flat versus a drop of 0.2 percent expected by economists.
Food prices jumped 4.9 percent in June from a year earlier, quickening from the 3.2 percent rise in May. Pork prices rose 1.1 percent year-on-year versus a fall of 4.9 percent in May.
The bureau also said China's producer prices fell 2.7 percent last month from a year earlier - the 16th consecutive month of deflation, compared with a drop of 2.9 percent in May.
Economists polled by Reuters had expected consumer inflation of 2.5 percent and factory-gate prices to fall 2.7 percent in June.
The easing producer price inflation still shows China's economy is struggling with overcapacity problems and weak demand," said Li Huiyong, economist at Shenyin & Wanguo Securities in Shanghai.
China's largest private shipbuilder, China Rongsheng Heavy Industries Group Holdings 1101.HK, was reported this week to have cut 8,000 jobs in recent months.