China’s pork prices have risen 20 percent since the start of this year, but the country is seeing minimal overall inflation. Consumer prices in China rose only 0.6 percent in August compared to a year ago, with much of the gain driven by food prices. Pork, a staple in China, alone accounts for nearly 1.8 percent of the Consumer Price Index (CPI).
Food, tobacco, and liquor together make up 30 percent of China’s CPI. Analysts Anna Zhou and Helen Qiao attribute the surge in Chinese pork prices to various factors, including supply constraints, swine disease, breeders fattening up pigs for short-term gains, and seasonal trends. Despite these rising pork prices, China still shows little overall inflation, partly due to the plummeting prices of beef.
Rising pork prices and low inflation
Increased beef imports, less restrictive tariffs, and more cattle slaughtering have created a beef supply glut, resulting in lower prices. Forecasts indicate an average inflation rate of 0.3 percent in China for all of 2024.
Pork prices are expected to climb further as demand peaks this winter. “Our analysis suggests that pork supply will likely remain lean in the medium term, implying further upside in pork prices,” the analysts noted. “However, increased supply of other meat products such as beef will likely offset this impact.”
In the U.S., consumers are feeling the effects of inflation, impacting their food choices and spending habits.
A recent survey from the Dallas Fed indicated weakening agricultural businesses, elevated costs, and a looming economic downturn. One respondent highlighted “modest growth” for dinner sausage, noting, “This category tends to grow as sausage is a good protein substitute for higher-priced proteins and can ‘stretch’ consumers’ food budgets.”
- Inc.”Pork Prices Are Exploding in China, but Inflation Has Barely Budged in the World’s Second-Largest Economy”.
- Bloomberg.”Charting the Global Economy: Deflation Concerns Mount in China”.
- FT.”Weak China prices boost deflation fears”.