"Rising pig prices could affect inflation"
Rising prices for pork and eggs could well push inflation in China above
It is expected that this should
prompt the Chinese central bank to raise interest rates at least two more times
this year, experts said.
A note by Goldman Sachs, one of the world's
largest global investment banks, said that "the surge in pork prices will likely
push year-on-year CPI inflation to above 4% very soon."
Official figures show that in China's 36 major cities, the pork
price increased 4.4 yuan (€0.43) per kilogramme to 14.5 (€1.41) in the first 20
days of May.
Figures on the website of the Chinese ministry of
agriculture reveal that the pork price on average increased 69.5% compared to
last year - and the prices have risen every day.
Now other food like
eggs, poultry and beef are also affected. Meat constitutes about 7% of the
Chinese Consumer Price Index (CPI) basket.
The rising pork prices
have caused people in the streets of e.g. Beijing to buy and eat less pork as it
has become unaffordable.
Reasons for the price hike
reason for the price hike, is thought to be a significant drop in the supply of
live hogs caused by PRRS in some pork-producing provinces last year, wiping out
more than a million pigs.
The cost of raising pigs has also risen
sharply in the last few months, as prices for corn and other feed ingredients
has increased tremendously.
Corn-based ethanol could well be to blame
for that, as China encourages the use of biofuels in an attempt to decrease air
pollution before the Beijing Olympics next
Several government departments are
reportedly dispatching inspectors to pork markets around the country to
investigate the price rises.
The Chinese government is also said to
be planning to set up a 'meat reserve' if pork and poultry prices keep
China boasts the world's largest population of hogs, with
about 485 million head at the end of 2006.
Chinese pork prices rise - sales fall
(24 May 2007)
â€¢ Chinese ministry of agriculture
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