Many will have to swallow soaring pork prices as Lunar New Year nears

Top News | AGENCIES 11 Dec 2019

China's consumer inflation climbed to nearly eight-year peaks in November as pork prices doubled, but factory-gate prices remained in the red, adding to uncertainty over whether the manufacturing sector is bottoming out as trade risks persist.

Beijing is under pressure to unleash more stimulus to boost industrial activity, but high inflation ahead of the Lunar New Year may be a headache for policymakers trying to shore up growth that has slid to its lowest in nearly 30 years.

Consumer prices in November rose 4.5 percent on year, the fastest pace seen since January 2012, driven mostly by a surge in pork prices as African swine fever ravaged the country's hog herds, National Bureau of Statistics data showed yesterday. That topped analysts' expectations of 4.2 percent and October's 3.8 percent rise.

Wholesale pork prices have seen a slight reprieve in November but remain elevated from a year earlier. The statistics bureau said pork prices more than doubled year-on-year in November.

Analysts expect pork will remain in high demand as China prepares to celebrate the Lunar New Year, the peak consumption period for the meat. Retail pork prices hovered at around 55 yuan (HK$61.15) per kilogram in November, according to agriculture ministry data.

China watchers also predict that pork price inflation may be close to a peak as recent policies to stabilize production and support the recovery of the pig herd have begun to show results.

Climbing consumer prices are adding to the headaches of policymakers who are racing to meet Beijing's annual growth target as the world's second-largest economy slows to the lower end of a 6 to 6.5 percent range for 2019.

However, core CPI for November remained benign at 1.4 percent, down from 1.5 percent in the previous month. For the full year of 2019, China is aiming for a CPI target of around 3 percent. It rose 2.8 percent in the January-November period.

In contrast, the producer price index, seen as a key indicator of corporate profitability, fell 1.4 percent on year, falling for the fifth month in a row.

That compared with a 1.6 percent fall in October.

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