China’s pork crisis sends consumer inflation rising to the brink of Beijing’s limit, highest level in six years
- September’s consumer price index rose to 3.0 per cent, largely due to soaring pork prices
- China’s producer price index, a measure of the prices manufacturers charge at the factory gate, also fell further into deflation at minus 1.2 per cent
China’s pork crisis sent prices spiralling to their highest reading since November 2013 as consumer inflation reached 3.0 per cent in September, according to official government data released on Tuesday.
The world’s most populous nation has been ravaged by an outbreak of African swine fever that added 1.65 percentage points to its consumer inflation last month.
The 3.0 per cent mark is the upper limit of Beijing’s consumer price index (CPI) target for 2019, placing more pressure on the government to source new supplies of pork, with African swine fever predicted to wipe out half the pig population by the end of 2019.
September’s producer price index (PPI), which was also released on Tuesday by the National Bureau of Statistics (NBS), sunk further to minus 1.2 per cent from a year earlier. This was again worse than August’s reading of minus 0.8 per cent but in line with analysts expectation for the price charged by manufacturers at the factory gates.
The deflation in producer prices showcases the pressure faced by manufacturers in the world’s second-largest economy, with the trade war with the United States now in its 15th month.
“Looking ahead, consumer price inflation should continue to accelerate in the coming months as supply disruptions continue to push up pork prices and as the drag from lower oil prices eases. But rapid food price inflation is unlikely to be a barrier to monetary easing, and we continue to anticipate further loosening in the next few quarters as demand-side pressures remain muted and factory-gate deflation deepens,” said Martin Lynge Rasmussen, China Economist at Capital Economics.