In this file:
· China Consumer Inflation Surge Seen as Unlikely to Shift PBOC
Pork prices jumped 5.1%, first increase in more than two years
· China producer inflation picks up for first time in nine months, eases deflation worries
· China’s African swine fever epidemic drives up inflation in March
China's Economy Is Likely to Grow ‘Well Above’ Target in 2019:
· China's 2019 pork production to fall 30 pct - Rabobank analyst
China Consumer Inflation Surge Seen as Unlikely to Shift PBOC
Pork prices jumped 5.1%, first increase in more than two years
CPI to rise further but factory deflation risks remain: CICC
April 11, 2019
China’s consumer prices surged on the back of temporary food supply factors, while factory inflation provided further evidence of a nascent economic recovery.
Consumer inflation accelerated to 2.3 percent in March from a year earlier, up from 1.5 percent in February and posting the biggest jump in more than a year. The surge was mostly led by rising vegetable and pork prices, which drove the CPI up by more than half a percentage point, according to the National Bureau of Statistics.
Core consumer prices, excluding food and energy, stayed flat at 1.8 percent, and factory inflation halted a dis-inflationary slide, gaining 0.4 percent.
Because the inflation rebound was driven by food-price increases that may prove temporary, the central bank is unlikely to abandon its policy of keeping cheap money flowing to the private sector for now. Lingering deflation risks and uncertainties over the trade war and the sustainability of the economic upswing also argue for caution.
“Monetary policy won’t make adjustments, and overall inflation won’t be a big issue for this year" because core inflation remains steady and factory-gate prices will stay at a low level going forward, said Ding Shuang, chief China and North Asia economist at Standard Chartered Bank Ltd. in Hong Kong. The People’s Bank of China is likely in an “observation window” at the moment.
Pork prices, a key element in the country’s CPI basket, rose 5.1 percent in March, the first increase after 25 months of decline. That alone drove the CPI to rise 0.12 percentage point, the NBS said in a statement. Over a million hogs were culled in an outbreak of African swine fever and pig feed output has dropped.
Rebounding factory prices signal a further firming in the nascent economic recovery, which if sustained give firms greater pricing power, aid profits and the help them repay their debts.
“The PBOC still have good reasons to cut reserve-requirement ratios again because there’ll be tax collection and maturing medium-term lending soon,” Ding from the Standard Chartered Bank Ltd said.
“Even if there’ll be policy shifts, it probably won’t come from monetary policy as it’s never been very loose”, he said, adding the pace of fiscal expenditure can slow down to save some bullets, if the economy does turn around.
The outlook for producer-price inflation is still modest. The PPI index will likely grow by just 0.3 percent in 2019, according to the median estimate of 15 economists in a Bloomberg survey, down from a forecast of 0.8 percent in February.
What Bloomberg’s Economists Say...
China producer inflation picks up for first time in nine months, eases deflation worries
By Stella Qiu and Se Young Lee, Reuters
via EuroNews - 11/04/2019
BEIJING (Reuters) - China's factory-gate inflation picked up for the first time in nine months in March, lifted by price rises in global commodities as well as signs that government efforts to boost the economy may be putting a floor under domestic demand.
Consumer inflation also quickened, jumping to the highest since October 2018 as pork prices soared due to a growing epidemic of swine fever, official data showed on Thursday.
The step-up in producer inflation, while slight, will ease deflation worries and likely add to optimism that the world's second-largest economy is starting to turn the corner. Recent surveys showed factory activity expanded for the first time in months in March.
But analysts urge caution, saying it will take a few more months of better data and further policy support from Beijing to see if a recovery can be sustained.
China's producer price index (PPI) in March rose 0.4 percent from a year earlier, driven largely by rapid rises in oil and gas prices, and advancing from a 0.1 percent increase in February, the National Bureau of Statistics (NBS) said.
That was in line with analysts' forecasts in a Reuters poll.
Most of the gain was in mining, with prices rising 4.2 percent on-year, up from 1.8 percent in February. Drops in raw material prices also moderated.
Beijing is fast-tracking more infrastructure projects, which is pushing up prices of construction materials.
Surging iron ore prices hit a record domestically on Tuesday, fuelled by concerns over tight global supply after disruptions to production and shipments at top miners in Brazil and Australia. Prices of steel reinforcing bars used in building hit a 7-1/2 year high this week.
But underlying demand in other parts of the economy still appears subdued. Prices of consumer durables fell for a second month, pointing to weakness in demand for big-ticket items such as cars and appliances.
"Looking ahead, we expect oil prices to fall back in the coming months. This will drag down PPI... Meanwhile, continued economic weakness is likely to keep a lid on broader price pressures," said Julian Evans-Pritchard, Senior China Economist at Capital Economics.
On a monthly basis, producer prices increased for the first time in five months. The index inched up 0.1 percent, compared with a 0.1 percent decrease in February.
The world's second-largest economy is growing at its weakest pace in almost three decades amid weaker domestic demand and a year-long trade war with the United States. Multi-year campaigns to curb debt risks and pollution have deterred fresh investment.
Last month, the government announced nearly 2 trillion yuan (227 billion pounds) in additional tax cuts to ease the pressure on corporate balance sheets, while authorities are pressing banks to keep lending to struggling smaller firms.
Cuts in value-added tax (VAT) that kicked in on April 1 have already led authorities to reduce prices for electricity and natural gas. Retail gasoline and diesel prices are to be reduced as well.
A growing number of companies ranging from Apple Inc to BMW have lowered prices for their products following the tax cuts.
SWINE FEVER DRIVING UP PORK PRICES ...
China’s African swine fever epidemic drives up inflation in March
Consumer price inflation rose 2.3 per cent year-on-year, a large increase on February’s figure, when consumer prices rose by 1.5 per cent
Producer price inflation rose 0.4 per cent, an increase on February’s figures, which had skirted dangerously close to deflationary territory, coming in at 0.1 per cent
Finbarr Bermingham, South China Morning Post
11 Apr, 2019
China’s consumer price inflation rose sharply in March, as the country struggles to contain the impact of an African swine fever epidemic that has sent pork prices soaring.
Consumer price inflation (CPI) rose 2.3 per cent year-on-year, a large increase on February’s figure, when consumer prices rose by 1.5 per cent.
This was in line with than a poll of economists done by Bloomberg, which had predicted a 2.3 per cent rise.
According to the National Bureau of Statistics (NBS), which released the data on Thursday, African swine fever along with refined oil price adjustments were the main drivers behind the rise in CPI.
According to the NBS, pork prices have risen 5.1 per cent year-on-year, which has contributed 0.12 percentage points to the rising CPI.
“Due to seasonal reasons, fresh vegetable prices have gone up 16.2 per cent year-on-year, causing CPI to rise by about 0.42 percentage points,” the NBS statement added.
There were also price gains in non-food sectors such as health care, culture and education.
While state media reported on Tuesday evening that new cases of African swine fever are slowing, the pig livestock and pork production industries have been suffering amid the outbreak.
Pork companies have seen their share prices plummet, with WH Group – the world’s largest pork producer and the owner of Smithfield, the biggest American pork producer, seeing its net profit for 2018 fall by 4 per cent.
In a research note released on Thursday, analysts from Nomura wrote...
China's Economy Is Likely to Grow ‘Well Above’ Target in 2019: Jefferies
April 10, 2019
China’s economy will likely grow far faster than the official target of 6 to 6.5 percent this year due to stronger fiscal stimulus including tax cuts and faster debt sales, according to analysts at Jefferies Financial Group Inc.
The pace of growth will normalize in 2020, Jefferies analysts, including Laban Yu, wrote in a report dated Wednesday.
While significant monetary easing may be less likely from here, growth momentum could push the stock market to test early 2018 highs, the analysts said. China’s economy...
China's 2019 pork production to fall 30 pct - Rabobank analyst
Reporting by Dominique Patton. Editing by Jane Merriman, Reuters
April 11, 2019 / 8:29 AM
BEIJING, April 11 (Reuters) - China’s 2019 pork output will fall by 30 percent compared with the prior year after an epidemic of incurable African swine fever spread throughout the world’s largest hog herd, a Rabobank analyst said.
Production is seen at around 38 million tonnes versus 54 million tonnes last year, Justin Sherrard, global strategist for animal protein at Rabobank, told Reuters, citing the company’s latest forecast.
China, which produces about half of the world’s pork, has reported about 120 outbreaks of the disease since August last year but many in the industry say it is much worse than reported.
The disease kills almost all pigs infected though it is not harmful to people. There is no vaccine or cure.
China’s agriculture ministry said last month that the national pig herd in February had fallen 16.6 percent year-on-year, and sow stocks were down more than 19 percent.
The number is much higher in some regions however. Stocks of breeding pigs in major Chinese hog producing region Shandong plunged 41 percent in the seven months to February, provincial authorities said.
Pig prices have soared, with rising pork prices driving consumer inflation in March to its highest since October 2018, data showed on Thursday.
The drop in production will mean China will have to increase pork imports by 1.5 million tonnes to around 4 million tonnes, sucking in all available supplies from the global market, Rabobank analyst Sherrard said.
Domestic production and imports of other animal proteins like poultry, beef, mutton and seafood will also increase to partially close the gap, the analyst said, but there could still be a gap of as much as 10 million tonnes, he said...