China battles ‘porkflation’ as price of popular meat soars

SHANGHAI — China’s pork prices surged again in August, as the government dips into national reserves to stabilize costs and ensure supply in the world’s biggest consuming nation of the meat.

The country’s headline consumer price index (CPI) slowed in August to 2.5%, according to official data Friday, while producer inflation eased to its lowest level in 18 months at 2.3% — far lower than in the U.S., U.K. and other nations battling decades-high inflation rates.

But the price of pork, a staple in China that is used in a wide variety of dishes, has bucked the trend by surging in recent months with average prices jumping 22.5% on-year in August after a 20.2% jump in July as output reductions squeezed supply.

Pork has the heaviest weighting among foodstuffs in China’s CPI.

The fresh data came after the government this week said it was dipping into frozen pork reserves for the first time this year in a bid to rein in prices as China gears up for this weekend’s Mid-Autumn Festival and National Day on Oct. 1.

But Chinese pork traders warned that the release of more frozen supply may not help much.

“Most of our customers prefer fresh pork to frozen pork,” said one seller in Shanghai. “Customers these days are buying less than before the lockdown in April because household incomes are flat and pork prices are rising,” he added, referring to a two-month COVID-19 lockdown in China’s financial capital earlier this year.

The government intervention was likely to ease supply concerns only in the short term, said Deng Shaorui, an analyst at Huatai Securities.

“Pork prices are going to stay at high levels,” Deng was quoted as saying by the Shenzhen Securities Times on Friday. “As the weather cooled and pork consumption recovered seasonally, demand is expected to grow ahead of the Mid-Autumn Festival and National Day holidays.”

 

By CK TAN / Nikkei Asia