Pork lifts mainland food prices sharply
Cary Huang in Beijing
Official data for June confirms rising trend
The mainland's food prices surged 11.3 per cent year on year last month due to a leap of nearly 60 per cent in the cost of pork and increases of more than 30 per cent in the cost of other staples, National Bureau of Statistics figures show.
The consumer price index in rural areas rose 5 per cent year on year last month, higher than the 4.1 per cent rise in urban areas, the bureau said yesterday.
On Thursday, it had announced that the CPI had risen 4.4 per cent nationwide.
The June food data confirmed a trend, following an 8.3 per cent year-on-year gain in May and a 7.1 per cent rise in April.
However, non-food prices rose just 1 per cent year on year last month, the bureau said.
Last month's increase in nationwide CPI was the largest since October 2004. The central bank had said it hoped to keep inflation below 3 per cent this year, but the CPI rose 3.2 per cent year on year in the first half.
Pork prices surged 59.8 per cent year on year last month, while prices for eggs rose 37.9 per cent, poultry and meat 35.7 per cent and edible oil 27.6 per cent.
The Ministry of Commerce had said that the wholesale price of pork rose 74.6 per cent year on year last month due to the increased cost of feed and a widespread outbreak of the contagious blue ear disease.
Ministry spokesman Wang Xinpei last week said pork prices would continue to fluctuate due to rising costs, despite government efforts to increase supply.
Premier Wen Jiabao has warned of the danger of rising food prices on the mainland, saying further rises could spark social unrest.
The rising prices of pork and other food items have dominated media coverage over the past two months, triggering a debate on what the government should do to help the poor cope with inflation.
Residential property prices rose 4.4 per cent year on year last month, while rents were up 4 per cent. The property prosperity index, which considers property prices, sales volume and consumer confidence, was at 103.63 at the end of June, up 0.7 points from a year earlier and 0.31 points from May, the bureau said. The producer price index rose 2.5 per cent year on year last month and by 2.8 per cent in the first half.
Ma Jun, chief China economist with Deutsche Bank, said the stable PPI suggested that the inflationary pressure was not due to overheated investment.
'The government understands that pork-led CPI inflation cannot be addressed by policies restricting investment growth,' Mr Ma said.
Among the PPI components for last month, the prices of raw materials, fuel and power rose 3.4 per cent from a year earlier, while the price of crude oil declined by 6.6 per cent and petrol dropped by 4.9 per cent.
Strong domestic demand due to rising incomes was also behind consumer inflation as urban retail sales jumped 15.9 per cent in the first half to 2.85 trillion yuan, the bureau said.
Hard to swallow
Changes (%) in Consumer Price Index for June
Grain up 6.1
Meat and poultry up 35.7
Pork up 59.8
Eggs up 37.9
Fresh vegetables up 4.8
Fresh fruit down 16.2
Tobacco and alcohol up 1.7
Transportation equipment down 2.4
Vehicle fuel and components down 1.2
Telecoms equipment down 18
Residential water, electrricity, fuel up 3.6
SOURCE: NATIONAL BUREAU OF STATISTICS