According to official data issued on Wednesday, the consumer price index in China reached a two-year high in July as hog prices increased once more.
Pork prices, a Chinese staple item, increased 20.2% in July compared to the same month last year. According to government data accessible through Wind Information, it was the first increase since September 2020.
The report revealed that pork prices experienced their greatest month-over-month increase on record, rising by 25.6%.
According to a statement released by Bian Shuyang, an agricultural products analyst at Nanhua Futures, farmers’ hesitation to sell in the hopes of receiving greater prices in the future was a factor in the spike in hog prices in July.
Bian anticipates it will be challenging for pork prices to rise above July’s levels.
According to Bian, two Chinese holidays in September and October will contribute in sustaining consumer demand for pork.
The analyst claims that the fact that live hog producers are currently making a profit is a sign that there will be an increase in supply.
Since there have been so many new producers and terrible diseases to contend with, pork prices have fluctuated significantly over the past three years.
According to the National Bureau of Statistics, fresh fruit and vegetable prices increased in July by 16.9% and 12.9%, respectively, over the same month last year.
Even though food prices increased, Wednesday’s inflation figures showed that China’s economy was still experiencing weak demand.
According to economists surveyed by Reuters, the headline consumer price index increased by 2.7% in July, falling short of forecasts for a 2.9% gain.
“Non-food prices actually declined in July [by 0.1%] from their June level, which reflects weak demand,” Pinpoint Asset Management’s president and chief economist, Zhiwei Zhang, stated in a note.
“The Covid outbreaks in many cities and the lack of further policy stimulus may have led to weaker growth in July,” he said.
Despite the summer break, the price of tourism only increased by 0.5% in July compared to the same month last year.
Travel plans have been hampered by covid outbreaks in recent weeks, which have resulted in canceled flights and venue closures in tourist destinations from the Tibetan plateau to Hainan island.
According to Wind data, China’s CPI reading for July was still the highest since July 2020, when the index also increased by 2.7%.
China’s inflation rates have consistently lagged behind those of the United States, which will issue its consumer price index statistics tonight. The consumer price index in the United States is predicted by economists surveyed by Dow Jones to increase by 8.7% from a year earlier in July, down from 9.1% in June.
According to statistics released on Wednesday, China’s producer prices continued to moderate and came in below forecasts.
The 4.2% year-over-year growth announced for July fell short of the 4.8% growth predicted by a Reuters poll.
“Falling PPI inflation also points to limited potential upside to CPI inflation” Ting Lu, the head of Nomura’s China economist, stated in a note.