China Struggles to Win Public Support Ahead of Consumer Price Index Announcement

Premier Li Keqiang Orders Effective Fiscal Input for Livelihoods... Warns Against Bureaucracy
China CPI Rise Inevitable, Processed Food Price Increase Expected Following Fresh Food

[Asia Economy Beijing=Special Correspondent Jo Young-shin] Ahead of the announcement of China's Consumer Price Index (CPI) on the 10th, the Chinese leadership has taken steps to win public support.

The Chinese leadership judged that recent consumer prices are unusual due to power shortages caused by coal inventory shortages, rising processed food prices due to international raw material price increases, and a sharp rise in vegetable prices. They recently conducted on-site inspections targeting 16 provinces, municipalities directly under the central government, and autonomous regions.

[Image source=Yonhap News]

According to Chinese media including the official Xinhua News Agency on the 4th, Premier Li Keqiang chaired the State Council executive meeting the day before and instructed to prepare effective measures to alleviate new downward economic pressures and difficulties faced by market participants.

Premier Li specifically pointed out the need to take practical measures to stabilize prices of daily necessities such as vegetables and eggs, ensure stable heating during winter, and maintain employment stability. He also warned against formalism and bureaucracy such as laziness, incompetence, and recklessness among public officials, emphasizing the need to make every effort to ensure that fiscal resources are effectively allocated to stabilize people's livelihoods.

The Chinese leadership appears to have directly ordered price stabilization, fearing a sharp rise in the CPI which had been stable so far. In fact, China's CPI inflation rate peaked at 1.3% year-on-year in May, then showed stability with 1.1% in June, 1% in July, 0.8% in August, and 0.7% in September.

Unlike the unstable trend seen in the Producer Price Index (PPI), which surged 10.7% year-on-year in September due to rising international raw material prices, the CPI did not show significant movement. It was anticipated that CPI inflation would follow after some time as PPI effects transmit to CPI.

Chinese economic media Caixin reported on the same day that rising international raw material prices have increased the costs of raw materials and supplies for Chinese food companies, and that major processed food companies in China will raise factory prices. Caixin added that prices of soy sauce, oyster sauce, vinegar, and other soy-based condiments are expected to increase by 3 to 15%.

Caixin also noted that some food processing companies that have not reflected increased costs such as raw materials in their prices tend to see deteriorating performance, and that price increases will help improve the performance of food companies.

Meanwhile, the National Food and Strategic Reserves Administration of China announced immediately after the State Council meeting that grain production and stockpiles such as rice and wheat this autumn are self-sufficient, holding more than 20 days' worth of inventory.

The National Development and Reform Commission of China also announced on the same day that nationwide coal inventories have increased by more than 31 million tons compared to the end of September, reaching 110 million tons, ensuring effective supply of coal for power generation this winter.

This content was produced with the assistance of AI translation services.