SHANGHAI'S inflation growth eased in May while economic activity strengthened, indicating resilience in the city's economy as the national economy stutters along.

The Consumer Price Index, the main gauge of inflation, rose 2.1 percent year on year last month in the city, down from a 2.2 percent rise in April, the Shanghai Statistics Bureau said today.

Industrial production expanded 2.9 percent to 258.2 billion yuan (US$41.6 billion), up from April's increase of 1 percent, which reversed a 1.9 percent loss in March.

"Shanghai's inflation remains tame and the city's economic performance is stronger than elsewhere in the country," said Li Maoyu, an analyst at Changjiang Securities Co.

Shanghai is trying to lead the country by focusing on growth quality through an economic restructuring that will reduce reliance on exports and investment.

In the first five months, fixed-asset investment in Shanghai gained 11.2 percent to 181.3 billion yuan, down from 13 percent in the January-April period.

Shanghai's gross domestic product expanded 7.8 percent on an annual basis in the first quarter, picking up from last year's 7.5 percent increase and the national average of 7.7 percent.

With only 0.06 percent of China's land, 1.8 percent of its population and 1.7 percent of its investment, Shanghai produced more than 4 percent of the nation's overall economic output last year.

The Shanghai government set an economic growth rate target of 7.5 percent this year.