June 23, 2011

Pork prices in China continued to soar last week amid a broad rise of farm products, which could drive the country's Consumer Price Index to peak with on-year growth about 6% in June, analysts predicted.

Prices for Chinese farm produce continued to gain slightly last week, with pork prices surging 4.8% over a week earlier and wholesale prices of major aquatic products jumping 1.2%, the Ministry of Commerce (MOC) said Tuesday (Jun 21). Food prices account for one third of the calculation of consumer price index, which rose 5.5% on-year in May, a new high since 2008.

Data from MOC show that during the week from June 13 to 19, prices of 18 staple vegetables dropped 1.9% for the fourth week running due to plentiful supply. However, price rise of grain and oils, eggs, aquatic and meat products helped drive up farm produce last week.

Meat prices presented an overall rise last week despite the dull consumption in summer, with prices of pork, beef, chicken and mutton respectively up 4.8%, 0.6%, 0.5% and 0.4%.

Decreasing pig stocks coupled with rising cost of feed and labour have pushed up pork prices to surpass the high point made in 2008.

According to the MOC, domestic average wholesale pork prices were at a record high of RMB23.61 (US$3.65)/kg on June 17.

Besides, rain-triggered flood ensuing drought in the past several months has posed difficulties for aquaculture and stimulated a rise in aquatic product prices. Last week, wholesale prices of eight major varieties of aquatic products rose 1.2% over a week earlier, marking the increase for the eighth straight week.

Food prices were a major player to push up CPI in May. The CPI rose 5.5% on-year that month. Food prices jumped 11.7%, contributing 64% for the CPI growth. Pork price rise expanded from 35.2% in April to 40.4% in May and became the most important factor to push up CPI. Such a situation is likely to extend to June.