Customers buying pork at a food market in Shanghai, China. Official data showed prices of pork, a staple food in China, rose 20.2% in July 2022 compared with a year ago.
Qilai Shen | Bloomberg | Getty Images
BEIJING – China’s consumer price index hit a two-year high in July as pork prices rebounded, according to official data released on Wednesday.
Prices for pork, a staple food in China, rose 20.2% in July from a year ago. It was the first increase since September 2020, according to official data accessed through Wind Information.
In fact, pork prices posted their biggest month-on-month increase of 25.6%, the data showed.
Farmers’ reluctance to sell, hoping to fetch higher prices in the future, contributed to the rise in pork prices in July, Bian Shuyang, an agricultural commodities analyst at Nanhua Futures, said in a statement .
Looking ahead, Bian expects it will be difficult for pork prices to exceed July levels.
Two Chinese holidays in September and October will help support consumer demand for pork, Bian said.
According to the analyst, live hog producers are now operating at a profit, an indication of more supply to come.
Pork prices have fluctuated wildly over the past three years as hog producers have had to battle deadly diseases and many new producers.
Fresh fruit and vegetable prices also rose in July, up 16.9% and 12.9% from a year ago, respectively, according to the Office for National Statistics.
Old food prices fall
Although food prices rose, Wednesday’s inflation data continued to reflect lackluster demand in China’s economy.
The core consumer price index rose 2.7 percent in July, missing expectations for a 2.9 percent increase, according to analysts polled by Reuters.
Covid outbreaks in many cities and the lack of additional policy stimulus may have led to weaker growth in July.
Zhiwei Zhang
chief economist, Pinpoint Asset Management
“Non-food prices actually declined in July [by 0.1%] from its June level, reflecting weak demand,” Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, said in a note.
“Covid outbreaks in many cities and the lack of additional policy stimulus may have led to weaker growth in July,” he said.
Despite the summer holidays, the tourism price component only increased by 0.5% in July compared to a year ago.
Covid outbreaks in recent weeks have disrupted holidays with canceled flights and site closures at tourist spots ranging from Hainan Island to the Tibetan Plateau.
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China’s CPI last month was still the highest since July 2020, when the index also rose 2.7 percent, according to Wind data.
China’s inflation data has been well below that of the United States, which is scheduled to release consumer price index data overnight. Economists polled by Dow Jones expect the US consumer price index to rise 8.7% in July from a year ago, down from 9.1% in June.
Data on Wednesday showed producer prices in China continued to moderate, also below expectations.
The 4.2% year-on-year increase reported for July missed the Reuters poll forecast of 4.8% growth.
“The drop in CPI inflation also points to limited potential for CPI inflation” in China, Nomura chief economist Ting Lu said in a note.
– CNBC’s Patti Domm contributed to this report.