(Yicai Global) Oct. 29 -- Pork prices in China will decline next year after a prolonged surge fueled inflation in the wake of African swine fever outbreaks, a new report claims.
Supply of the nation's favorite meat will gradually improve next year thanks to a number of measures that have been taken, bringing down the cost and leading to a significant drop in the rate of consumer price inflation, according to the report published today by the Shanghai University of Finance and Economics.
The increase in fresh meat prices, driven by pork price gains, led to a decline in the consumption of meat products in the third quarter, the SUFE's report said. Sales of foodstuffs dipped 0.09 percent in September from a year earlier, marking the first contraction in nearly four years, it said.
Average year-on-year growth in the CPI was 2.9 percent in the third quarter, higher than the 2.2 percent logged in the first half, the report said. The average rise in the rate of core CPI was 1.5 percent, lower than the first half's 1.8 percent.
The big difference was mainly caused by the rapid increase in food prices, the report's authors noted. Food prices rose an average 10.1 percent in the third quarter, much faster than the 4.7 percent pace in the first half. In contrast, non-food prices gained by an average 1.1 percent, slower than the 1.6 percent in the first six months of the year.
The sharp increase in pork prices was the main reason for soaring food costs in the third quarter, the report found on further analysis. Pork prices jumped 17 percent, 46.7 percent, and 69.3 percent, respectively, in July, August and September, resulting in about 0.6, 1.1, and 1.7 percentage point increases in the CPI.
Given the severity of outbreaks of African swine fever and the short-term difficulty of restoring pork supply, the report expects CPI growth to stay high in the fourth quarter while core CPI, excluding food and energy prices, will remain relatively low.
With the introduction of various measures, pork supply will gradually improve and prices are expected to fall next year. At the same time, due to insufficient demand, the core CPI growth rate will remain relatively low in the short term. The report forecasts that year-on-year CPI growth rate, in the absence of extreme weather, will fall significantly, especially in the second half of the year.