China consumer prices jump to near 8-year high as pork soars more than 100 per cent
- China’s consumer price index jumped to 3.8 per cent in October, the highest since January 2012 on higher prices for pork, other meats
- Consumer price index above expected, up from 3.0 per cent in September
A doubling of pork prices pushed China’s consumer prices to a nearly eight year high in October, as Beijing’s domestic challenges intensified amid the slowing of the economy and the trade war with the United States.
Adding to Beijing’s woes, the price of poultry soared 66.8 per cent in October, as increased demand for chicken and other poultry products as a substitute for pork pushed up those prices.
But absent meat, price pressures in the economy are tame, at least for now. Consumer prices for items other than food actually fell to only 0.9 per cent in October, down from 1.0 per cent the month before.
“The inflation jump remains the pork story, a combination of [African swine fever] and the rising pork price cycle. The two-year leading indicator, sow stock, is at an historical low,” said Dan Wang, an analyst at The Economist Intelligence Unit. “With no cure and no vaccination, we expect inflation to stay above 3 per cent in at least the coming two years. Markets have yet to grasp that high inflation will be a persistent, rather than temporary, phenomena,” she said.
The sharp rise in meat prices poses a huge challenge for Beijing. The Chinese eat more pork by far than any other people in the world. The shortfall in Chinese pork supply is so large aggressive imports from the rest of the world would not be able to fill it.
Higher prices for pork and other meats fly in the face of Beijing’s efforts to encourage consumer spending to stabilise the slowing economy. With consumers spending more on food – amid fears about jobs and income caused by the trade war – they are less likely to spend on other products, particularly expensive items like appliances and cars.
