Chinese efforts to stop African swine fever from spreading any further in its crucial pig population aren’t working out at all, stated Capital Economics, a research firm. That is bound to cause inflation levels to go beyond their targeted rates next year, the 1st time this has happened in over 10 years.
The government’s measures aimed at containing the fallout of the disease aren’t likely to have any significant impact, stated Evans-Pritchard via a note.
This swine fever epidemic, which was detected in 2018, has inflicted a major hit on the world’s biggest pork producer. This is also a country that relies heavily on meat products and consumes it extensively. Rabobank analysts had predicted in July that the supply of pigs in China had taken a hit of around 40% compared to last year, and stated that Chinese pig herds could be halved by the end of this year compared to 2018.This shortage has also sent pork prices soaring. In August, pork prices were increased by 46.7% YoY, as per China’s NBS report.
Evans-Pritchard stated that the intervention led by the Chinese government for halting ASF from spreading anymore and for mitigating its huge impact on current pork prices hasn’t been effective at all, in any manner. Inflation is only likely to increase beyond the government’s targeted figure, which would be the 1st time this has occurred in over a decade.
Evans-Pritchard also predicted that prices could further by increase by over 80% next year on a YoY basis, compared to 2019.
This is only going to pull down China’s CPI even further. Inflation is likely to hit an average of around 3.5% & culminate at 4% in 2020, he explained. This would be significantly higher than the 3% inflation target that had been set by PBOC, the Chinese Central Bank.
March saw Chinese consumer prices increase by over 2.3% in Aug as a result of increased food prices, which are currently at a 6-month high.