Mainland Food Prices Jump As Pork Prices Soar

The cost of food continues to rise on the mainland, as the consumer price index (CPI) – a gauge of retail inflation – hit 2.7 percent, the same as last month, which was the highest since February 2018.

The data released on Wednesday shows food prices bounced 6.1 percent in June from last year, led by a 21.1 percent jump in the cost of pork – which also carried upwards the prices of other meats such as chicken.

The cost of fresh fruit soared more than 40 percent as wet weather in the south hit crops, Bloomberg News reported.

The African swine fever epidemic has wiped out China's pig herds since hitting the country last year.

"The recent collapse in pig supply suggests that upward pressure on food prices is likely to intensify in the coming months," said Julian Evans-Pritchard of Capital Economics in a note.

Chinese officials said last week that new cases of African swine fever have declined and pork production is returning to normal, but reporting by local news outlet Caixin and analysts say the government is downplaying the size of the problem.

Meanwhile factory prices on the mainland were unchanged in June from a year ago, reviving the prospect of deflation as the US trade war hits the crucial manufacturing sector.

At the same time consumer prices managed to meet expectations but the main support came from a surge in food prices owing to the impact of African swine fever on pork supplies and severe weather hitting fresh fruits.

The producer price index (PPI) – an important barometer of the industrial sector that measures the cost of goods at the factory gate – came in at zero in June, down from a 0.6 percent rise in May, the National Bureau of Statistics said.

The reading is the weakest since August 2016, and fell short of the 0.3 percent forecast in a Bloomberg News survey.

A slowdown in factory gate inflation reflects sluggish demand, while a turn to deflation could dent corporate profits and drag on the world's number two economy, which in turn could lead to a drop in prices globally.

"The tepid inflation signals are an unambiguous sign of current and looming economic problems facing China as a direct result of trade frictions with the US," said Stephen Innes, managing partner at Vanguard Markets. (AFP)