CHINA’S consumer inflation edged up in June, official data showed today, on the back of rising food prices as the costs of pork spiked due to tighter supplies.

The world’s second-largest economy has largely been spared the impact of a global surge in food prices caused by Russia’s war in Ukraine, but the relative stability could be upended by rising pork prices – a staple meat in the country.

In June, the consumer price index (CPI), a key gauge of retail inflation, rose 2.5% on-year in line with analyst expectations but dipped 0.2% from May due to a price drop in most foods except pork.

“Prices of fresh vegetables, eggs, fresh fruit and seafood dropped… due to factors such as increased supply and improved logistics,” National Bureau of Statistics senior statistician Dong Lijuan said in a statement.

“Influenced by factors such as the stabilisation of the epidemic and increase in consumer demand, pork prices continued to rise by 2.9%.”

In a sign of officials’ concern, authorities said this week they were considering tapping into the country’s pork reserves in a bid to rein in the cost of the meat after prices soared by almost a third on-year in late June.

China’s government keeps stores of frozen pork in warehouses and occasionally releases reserve meat to stabilise prices, especially during peak periods of demand like the Lunar New Year.

Pork prices have been hit hard in recent years after the country’s herds were ravaged by African swine fever, causing consumer inflation to spike.

Food and gasoline prices rose 2.9% and 33.4% respectively on-year, the statement said, reflecting the broader impact of the Ukraine war despite consumer inflation levels staying broadly even month-to-month.

This particularly affected the prices of fresh fruit and aviation tickets, which rose 19% and 28.1% on-year respectively.

Meanwhile, the producer price index – measuring the cost of goods at the factory gate – rose 6.1% from a year ago, slightly below May’s figures but above analyst expectations of 6%.

Factory inflation has hovered at high levels in recent months as global commodity prices spiked, although costs eased in recent months as the flow of goods in industrial chains stabilised after domestic Covid-19 lockdowns were eased.

“Changes in international crude oil prices drove up prices in related domestic industries,” Dong wrote, citing spikes in the cost of fossil fuel extraction and processing industries.

However, prices fell in steel, cement and related industries due to lower demand and the “slowdown in investment growth”, as well as infrastructure construction being hampered by recent domestic outbreaks. – AFP, July 9, 2022.