In this file:
· China consumer prices rise but worries persist over core inflation
… The outbreak of African swine fever in the summer of 2018 led to the culling of millions of pigs, which raised the price of pork — one of the most important components in China’s consumer price index. In July, pork prices increased 86 per cent year-on-year...
· China’s Inflation Surprised to Upside in December. Outlook Moderates amidst Fall in Pork Price
· Beijing’s Virus Clampdown Spurs Food Price Surge and Shortages
China consumer prices rise but worries persist over core inflation
Gains driven by higher cost of food after lagging industrial growth in recent months
Thomas Hale in Hong Kong, Financial Times
Jan 11, 2021
China’s consumer price index moved back into positive territory in December, raising hopes that the country’s economic recovery will further bolster demand at a time when core inflation remains weak.
The country’s consumer price index beat expectations to edge 0.2 per cent higher year-on-year in December after falling 0.5 per cent a month earlier, with the gains largely driven by food prices.
Price growth in China has been anaemic over recent months despite the country’s rapid recovery from the coronavirus, which has been powered by industrial production as new cases have remained low.
China’s gross domestic product is expected to have grown 2.1 per cent last year, compared with anticipated contractions in other economies.
Core inflation, which excludes food and energy prices, fell to 0.4 per cent year-on-year in December — lower than at any point since the coronavirus outbreak began and its weakest level since early 2010.
Persistently low levels of inflation have created a conundrum for policymakers as other areas of the economy continue to heat up. The People’s Bank of China cut benchmark lending rates last year, but the government has since moved to constrain the property sector.
“With economic activity set to remain strong and underlying inflation likely to rebound, we think the PBOC will tighten policy this year,” said Julian Pritchard-Evans, senior China economist at Capital Economics.
He added, however, that consumer prices might return to deflation in coming months on the back of sharp rises in pork prices last year.
The outbreak of African swine fever in the summer of 2018 led to the culling of millions of pigs, which raised the price of pork — one of the most important components in China’s consumer price index. In July, pork prices increased 86 per cent year-on-year...
China’s Inflation Surprised to Upside in December. Outlook Moderates amidst Fall in Pork Price
Jan 11 21
China’s inflation surprised to the upside in December. Thanks to food price, headline CPI improved to +0.2% y/y in December, compared to deflation of -0.5% a month ago. Food inflation rebounded to +1.2% y/y, after contracting -2% a month ago, as pork price deflation narrowed to -1.3% from November’s -12.5%. Inflation in fresh fruit accelerated to +6.5% in December, from +3.6% in the prior month. Non-food price was flat from the same period a year ago, following a deflation of -0.1% in November. Core CPI, inflation excluding food and energy, eased to +0.4% in December.
Upstream PPI deflation eased to -0.4% y/y in December, from -1.5% a month ago. Caution should be taken in analyzing China’s inflation in January and February due to seasonal factor. Chinese New Year holiday will happen in February this year, compared with January in 2020. This could have distorted January’s inflation to the downside.
For the year ahead, we expect to see divergence in China’s upstream (PPI) and downstream (CPI) inflation. After a year of weakness, commodity prices should improve this year. Indeed, China’s manufacturing PMI reports have shown pickup in input prices over the past months. The official (NBS) manufacturing PMI report showed that the input price sub-index rose to 68 in December from 62.6 previously, while the Caixin report showed a 4.5-point rise to 59.2 in the corresponding index. The recovering trend suggests that the country’s PPI could gradually return to the positive territory this year.
The outbreak of the African Swine Fever in China in 2018/19 led to a sharp fall in hog stock, causing rallies in pork price...
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Beijing’s Virus Clampdown Spurs Food Price Surge and Shortages
January 11, 2021
Beijing’s move to prevent the spread of Covid-19 infections to the capital city is triggering a spike in food prices, with some supplies of meat and vegetables running out quickly amid fears of a shortage.
The political and cultural center of China is testing truck drivers who are delivering food supplies via highways in the neighboring province of Hebei, where a city of 11 million people has been locked down after the emergence of some 200 virus cases, the country’s worst outbreak in about two months.
The move has held up fruit and vegetable supplies as trucks that need to pass through Hebei to Beijing are unable to enter, said Wang Changyu, a vegetable dealer at Beijing’s biggest wholesale market Xinfadi. One local wet market visited by a Bloomberg reporter on Monday had sold out of pork early in the morning and turnips by midday. Prices of some fruits and vegetables doubled...
... It isn’t just the extensive virus testing that has pushed up food prices. Chilly weather increases logistical and transportation costs, while record corn prices have boosted meat and poultry prices, including pork, mutton and eggs...