Hogageddon forces up pork prices in China
African swine fever results in a 46.7% price surge in August, fueling a rise in food inflation
By Jimmy Yee, Asia Times
Sep 10, 2019
Hogageddon forced up food inflation in China last month as pork prices surged by 46.7% on the back of an African swine fever epidemic in the world’s second-largest economy.
The year-on-year jump illustrated the depth of the problem after millions of pigs were slaughtered, or died, from the outbreak.
Data from the National Bureau of Statistics showed that the cost of food in the official Consumer Price Index, or CPI, jumped by 10% in August compared to the same period last year.
Significantly, that was the highest level in more than seven years.
“Consumer price inflation should accelerate in the coming months as pig stocks continue to fall,” Julian Evans-Pritchard and Martin Rasmussen, economists with Capital Economics, wrote in a note released on Tuesday.
The knock-on effect also hit beef, mutton and chicken prices, which soared by between 11.6% and 12.5% last month compared to the same period in 2018. Unseasonal weather continued to play havoc with fresh fruit prices, which increased by 24% year-on-year, although it was down from July’s 39% rise.
“But the upcoming [reserve requirement ratio] cuts announced last Friday are in line with our view that rampant food price inflation is not a barrier to monetary easing, and we continue to anticipate further loosening in the next few quarters,” Evans-Pritchard and Rasmussen said.
They were referring to the decision last week by the People’s Bank of China to reduce the amount of funds banks have to hold in reserve in a move to stimulate the economy as the trade war with the United States drags on.
Still, it was the rise in pork prices which have grabbed the headlines during the past three months.
Up to 200 million pigs could die, or be culled, in China this year after contracting African swine fever. If that happens, pork prices could soar by 70%, according to a senior Chinese official who declined to be named.
‘Hog cycle’ ...
more, including links