3 yrs ago, rising pork prices helped push inflation to a
record high. Now, many Chinese are fearful that they are
experiencing deja vu, as the price of pork rises, and threatens
to exacerbate inflation concerns that have affected the World's
Pork prices have risen up for months now, as the consumer
price index (
), the main gauge of inflation, rose by a 34-month high of 5.5%
from a year earlier in May, the National Bureau of Statistics (
) said last Tuesday. The figure is far above the government's
annual target of 4%.
NBS spokesman Sheng Laiyun attributed the rising
inflation largely to an 11.7% rise in food prices, fueled by
drought and flood in some farming regions.
He specifically blamed pork prices as the main cause, with an
increase of 40.4% in May Y-Y, which contributed about 20% to the
Food prices account for nearly one third of the nation's CPI
calculation, and pork prices make up a big part of food prices,
said Li Tiegang, vice dean of School of Economics of Shandong
University. "Higher pork prices will definitely drive up CPI," he
said. Each 20% increase in pork prices results in a lift of 0.6
percentage points in CPI growth.
Data from the Ministry of Commerce (
) showed that pork prices have started trending up-ward since the
end of May last year, when pork prices stood at 14.47 Yuan per
kg, the lowest in Y 2010.
In the week ending June 12 this year, pork prices reached
22.52 Yuan per kg, up 55.6% from the bottom last year, closer to
the historical high of 22.88 Yuan on February 8, 2008.
The ministry's spokesman Yao Jian said Wednesday that the
continuous rise has resulted from reduced pig breeding and supply
shortages due to low prices at this time last year and rising
labor and feed costs.
From January to May, the average price of Corn was 2.26 Yuan
per kg, up 11.2% from a year ago, and salaries for breeders rose
more than 20%, the Ministry of Agriculture said in a statement on
its website Wednesday.
To buy a piglet in May and raise it to a 100-kg hog requires
1,230 Yuan, which includes feed and labor expenditures, up 15.6%
from a year ago, according to the statement.
Analysts forecast that inflation will pick up again in June to
possibly around 6%, prompting the central bank to introduce
further tightening measures.
The central bank decided last Tuesday to raise the reserve
requirement ratio for the 6 time this year to contain the high
inflation. The central bank also raised interest rates 2 this
Paul A. Ebeling, Jnr.
Paul A. Ebeling, Jnr. writes and publishes The Red
Roadmaster's Technical Report on the US Major Market Indices, a
weekly, highly-regarded financial market letter, read by opinion
makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and
stock markets since 1984, following a successful business career
that included investment banking, and market and business
analysis. He is a specialist in equities/commodities, and an
accomplished chart reader who advises technicians with regard to
Major Indices Resistance/Support Levels.