Customers buy pork at a food market in Shanghai, China. Pork prices, a staple food in China, rose 20.2% year on year in July 2022, official data showed.
Qilai Shen | Bloomberg | Getty Images
BEIJING — China’s consumer price index hit a two-year high in July as pork prices rallied, according to official data released on Wednesday.
Pork, a staple food in China, rose 20.2% year on year in July. According to official data, which can be accessed via Wind Information, this was the first increase since September 2020.
In fact, pork prices posted their biggest monthly increase on record — up 25.6%, the data showed.
The reluctance of farmers to sell – in the hope of being able to achieve higher prices in the future – Contributed to the rise in pork prices in July, Bian Shuyang, agricultural products analyst at Nanhua Futures, said in a statement.
Looking ahead, Bian expects pork prices to struggle to surpass July’s levels.
Two Chinese public holidays in September and October will help prop up consumer demand for pork, Bian said.
According to the analyst, live pig producers are now operating at a profit, an indication of another supply.
Pork prices have risen sharply over the past three years as pig farmers struggle with deadly diseases and many new producers.
Fresh fruit and vegetable prices also rose by 16.9% and 12.9% year-on-year in July, respectively, according to the National Bureau of Statistics.
Ex-grocery price collapse
While food prices rose, Wednesday’s inflation data continued to reflect weak demand in China’s economy.
According to analysts polled by Portal, the headline consumer price index rose 2.7% in July, missing expectations for a 2.9% rise.
Covid outbreaks in many cities and a lack of further policy stimulus may have led to weaker growth in July.
Zhiwei Zhang
Chief Economist, Pinpoint Asset Management
“Non-food prices actually fell in July [by 0.1%] from their June level, reflecting weak demand,” said Zhiwei Zhang, president and chief economist of Pinpoint Asset Management, in a statement.
“Covid outbreaks in many cities and lack of further policy stimulus may have led to weaker growth in July,” he said.
Despite the summer holidays, the tourism price component in July increased by only 0.5% compared to the previous year.
Covid outbreaks in recent weeks have disrupted holidays with canceled flights and venue closures at tourist attractions from Hainan Island to the Tibetan Plateau.
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China’s CPI print for the last month was still the highest since July 2020, when the index also rose 2.7%, according to Wind data.
China’s inflation data is well below that of the US, which is due to release its CPI data overnight. Economists polled by Dow Jones expect the US CPI to rise 8.7% yoy in July, compared to 9.1% in June.
Wednesday’s data showed that China’s producer prices remained moderate and also fell short of expectations.
The 4.2% year-on-year increase reported for July missed Portal’ poll forecast of 4.8% growth.
“The falling PPI inflation also suggests limited upside potential for China’s CPI inflation,” said Ting Lu, China’s chief economist at Nomura, in a statement.
— CNBC’s Patti Domm contributed to this report.