Chinese Inflation Surges as Pig Prices Fly High
October 15 2019 - 1:26AM
Dow Jones News
BEIJING-- Surging pork prices pushed China's consumer inflation
to a near six-year high in September, complicating Beijing's effort
to stimulate growth but also giving it a strong incentive to buy
more agricultural goods from the U.S.
The consumer-price index rose 3% in September from a year
earlier, according to data released by the National Bureau of
Statistics on Tuesday, bumping up against Beijing's inflation
target of "around 3%" this year. The rise in consumer prices
accelerated from August's 2.8% expansion and topped a median
forecast for 2.9% growth from economists polled by The Wall Street
Journal.
The main factor was surging pork prices, up 69% from a year
earlier--the fastest rise in 12 years--and contributing to more
than half of the headline CPI's September increase, the statistics
bureau said. Outbreaks of African swine fever, a highly infectious
virus that is fatal to pigs but not contagious to humans, has
severely hurt pig output in China, the world's largest pork
producer and consumer.
The quick rise in pork prices and the CPI have already made
Beijing more willing to buy pork and related farm goods from
overseas markets such as the U.S.
Increasing the purchase of agricultural products from the U.S.
could address one of the Trump administration's major China trade
complaints and temper the food-price surge at home.
China's pork imports in September jumped 72% from a year
earlier, following a 76% increase in August, according to
calculations by The Wall Street Journal based on data released by
China's customs bureau Monday.
High-level trade talks between China and the U.S. in the past
few days yielded a truce, with President Trump saying Beijing would
buy American agricultural products worth $40 billion to $50
billion, while he would shelve a planned tariff increase on Chinese
imports.
Due to the protracted trade fight, China's purchases of farm
goods from the U.S. plummeted to $8.6 billion in 2018, down from an
annualized average of $21 billion recorded between 2012 and 2017,
Chinese investment house CICC said in a research report Sunday.
In September, food prices in China rose 11% from a year earlier,
the strongest pace in nearly eight years, while nonfood prices
moderated to a 1% rise from a 1.1% increase in August.
"The danger of prolonged food inflation is it may drive
inflation expectations," said Ning Zhang, an economist at UBS.
Policy makers will have a hard time taming inflation if consumers
get used to steadily rising prices, he said.
Meanwhile, China's producer-price inflation slowed further in
September as raw-material prices eased, the statistics bureau said.
The producer-price index fell 1.2% year over year in September,
compared with a 0.8% decline in August.
"Chinese authorities will need to stand on guard against
pork-fueled consumer inflation, though they will probably continue
a cautious easing stance to spur economic growth," Mr. Zhang
said.
In a meeting with provincial governors Monday, Chinese Premier
Li Keqiang said the Chinese economy is under increased pressure
amid sluggish demand, cooling growth momentum in some localities
and surging prices of some food items. He urged local officials to
withstand the pressure and stabilize prices and employment growth
to fulfill China's economic targets this year.
A poll of economists by The Wall Street Journal expects China's
economic growth to show a further slowdown to 6.1% in the third
quarter, which would be the weakest pace in more than 25 years. The
National Bureau of Statistics will release the growth and other
economic data Friday.
Grace Zhu and Liyan Qi
(END) Dow Jones Newswires
October 15, 2019 01:11 ET (05:11 GMT)
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