August 5, 2021

China inflation flattens as surge in pork prices slows

2 min read

BEIJING: Chinese consumer inflation stabilised at an eight-year high in December, data showed Thursday (Jan 9), as the rise in the cost of pork slowed after authorities dipped into the nation’s reserves to battle the impact of African swine fever.

The consumer price index, a key gauge of retail inflation, has been consistently rising over the past year as the disease ravages pig herds across China, leading the price of pork – the country’s staple meat – to more than double.

However, with the Lunar New Year break at the end of January a peak time for pork consumption, Beijing has released more than 100,000 tons since the middle of last month to ease the strain on supplies.

The CPI came in at 4.5 per cent last month, the same as November and slightly below the 4.7 per cent forecast in a survey by Bloomberg News.

For the full year of 2019, consumer prices rose 2.9 per cent.

OCBC Bank’s head of Greater China research Tommy Xie told AFP he expects prices to soften slightly in 2020, although pork prices are likely to remain elevated for the first half of the year.

“But there is a chance for prices to go down in the second half, because of a higher base of comparison,” he said, referring to higher pork prices in 2019.

Pork prices rose 97 per cent on-year in December, much slower than the 110.2 per cent rally seen in November, while they were down 5.6 per cent on-month.

“With positive changes in hog production, a release of pork from central and local reserves to the market, as well as a rise in imports, the pork supply situation has eased slightly,” the National Bureau of Statistics said.

Julian Evans-Pritchard, senior China economist of Capital Economics, said: “Pig supply jumped by the most in a decade last month, adding credibility to official statements that African swine fever has come under control.”

China’s pork supply has been hammered since swine fever began to spread in August 2018, with vice agriculture minister Yu Kangzhen saying on Wednesday the situation remains “severe and complex”.

But some expect prices to spike again after the New Year break – with the disease still ravaging the industry and farms likely wary of restocking their herds.

The producer price index, an important barometer of the industrial sector that measures the cost of goods at the factory gate, fell 0.5 per cent in December from a year ago, more than the 0.4 per cent drop forecast.