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MNI REALITY CHECK: Upside China CPI Risk Despite Cheaper Pork

Services prices rose modestly into the autumn holiday season, but pork prices likely capped any large CPI gains

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China's consumer prices may accelerate only modestly in September, as continuing declines of pork prices weigh on the wider index despite service prices seeing limited upticks following and easing of sporadic outbreaks of Covid-19 cases, industry leaders and analysts told MNI.

"CPI may rise 0.8% y/y, flat from August's 0.8% growth," said Wang Jingwen, a senior researcher at the Pangoal Institution. On a monthly basis, CPI could rise 0.2%, compared to the previous 0.1% reading, Wang added.

He noted that the price index of edible agricultural products tracked by the Ministry of Commerce fell 1.9% m/m in September, reversing the short-run return to positive territory in August.


With vegetable prices little changed, pork prices fell by about CNY2 per kilo throughout the month, said a staff member at Beijing Jinxiu Dadi agri-food wholesale market.

Average live hog prices declined to CNY12.53 per kilo in September, down 15.91% m/m or 64.33% y/y, according to Zeng Zihua, chief analyst at EasyHogs Inc, an online community for pig breeders. Though the production capacity of live hogs has fully recovered to the levels seen before the 2018 African Swine Fever, demand for pork remains sluggish, possibly 80% or 90% of the pre-pandemic level, continuously weighing on prices, said Zeng.

However, Zeng noted that pork prices picked up in early October as the weather turned cold, driving demand for fat and helping boost prices of large-size hogs. But the existing oversupply could continue into year-end, although pork consumption could rise seasonally in Q4, lifting hog prices between CNY12-13 per kilo, Zeng estimated.

Though hog breeders have started to weed out some sows to cut losses, any impact on supply may not show till the second half of next year, Zeng added.


As local resurgences of the epidemic eased, prices of close-contact services including travelling and catering recovered moderately, as did rental prices, according to analysts from CICC, who noted that prices of consumer goods may continue to be driven up by higher industrial producer prices.

Wang expects PPI could rise further to a new high of 10.2% y/y from August's 9.5% due to commodity price increases as well as the country's energy consumption control. Wang also sees PPI peaking in October at 10.5%.

Meanwhile, the government hiked domestic gasoline and diesel prices twice in September, leading to a total increase of CNY230 and CNY225 per ton respectively. This resulted in a rise of about CNY8.5 to fill a 50-liter fuel tank with unleaded fuel for private car owners, said Chen Ling, an analyst at, a Shandong-based commodity data provider.

Prices of domestic refined oil rose sharply last month, due to rising crude oil prices and increasing demand into the September and October holidays, coupled with decreased supply amid power cuts, said Chen. She added that there is room for further price hikes in the near term.

The data will be released Thursday, October 14 at 0930 Beijing Time, with the median of analysts' expecting September CPI to rise 0.8% y/y, largely in line with the 0.8% gain seen in August.