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Prices of pork, a food staple in China, rose by 20.2% in July from a year ago. The month-on-month gain was the highest on record, according to official data accessed through Wind Information.
However, according to analysts polled by Reuters, China’s headline consumer price index rose by 2.7% in July, missing expectations for a 2.9% increase.
“Non-food prices declined in July [by 0.1%] from their June level, which reflects weak demand,” Zhiwei Zhang, president and chief economist of Pinpoint Asset Management, said in a note.
According to official data released Wednesday, China’s consumer price index hit a two-year high in July as pork prices rebounded. Prices of pork, a food staple in China, rose by 20.2% in July from a year ago. It marked the first increase since September 2020, according to official data accessed through Wind Information.
Pork prices posted their most enormous month-on-month surge on record — up by 25.6%, the data showed. Farmers’ reluctance to sell — in hopes of getting higher prices in the future — contributed to July’s pork price surge, said Bian Shuyang, agricultural products analyst at Nanhua Futures, in a statement.
Bian expects it will be difficult for pork prices to surpass July’s levels. Bian said two Chinese holidays in September and October would help support consumer demand for pork.
According to the analyst, live hog producers operate at a profit, indicating more supply. Pork prices have swung wildly over the last three years as hog farmers battle deadly diseases and many new producers.
According to the National Bureau of Statistics, fresh fruit and vegetable prices also jumped in July, up by 16.9% and 12.9% from a year ago.
While food prices rose, Wednesday’s inflation data reflected lacklustre demand in China’s economy. According to analysts polled by Reuters, the headline consumer price index rose by 2.7% in July, missing expectations for a 2.9% increase.
“Non-food prices actually declined in July [by 0.1%] from their June level, which reflects weak demand,” Zhiwei Zhang, president and chief economist, Pinpoint Asset Management, said 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 holidays, the tourism price component only rose by 0.5% in July from a year ago.
Covid outbreaks in the last few weeks have disrupted vacations with cancelled flights and venue closures in tourist spots ranging from Hainan island to the Tibetan plateau.
According to Wind data, China’s CPI print for last month was still the highest since July 2020, when the index also rose by 2.7%.
China’s inflation data has run far below that of the U.S., which is set to release its consumer price index data overnight. Economists polled by Dow Jones expect the U.S. consumer price index to rise 8.7% in July from a year ago, down from 9.1% in June.
Wednesday’s data showed China’s producer prices continued to moderate, also coming in below expectations. The 4.2% year-on-year increase reported for July missed the Reuters’ poll forecast of 4.8% growth.
“Falling PPI inflation also points to limited potential upside to CPI inflation” in China, Nomura’s chief China Economist Ting Lu said in a note.
