Chinese Consumer Prices Also Fluctuate... China's Economy Faces Comprehensive Crisis

Concerns Over April CPI Surging Above 2%, Pork Price Decline Halts Creating Illusion
Supply Shortages Due to Lockdowns and Ongoing Russia-Ukraine War Make Increase Inevitable

[Asia Economy Beijing=Special Correspondent Jo Young-shin] There is a forecast that China's Consumer Price Index (CPI) will surge into the 2% range in April. Amid the plunge of China's major economic indicators due to lockdowns caused by the spread of COVID-19, concerns are rising that if prices also increase, the Chinese economy could face a comprehensive crisis.

China Economic Information Daily reported on the 6th that with the rise in international raw material prices and the increase in prices of fresh products such as vegetables, the April CPI could enter the 2% range. China's National Bureau of Statistics will announce the CPI and Producer Price Index (PPI) on the 11th.

China Economic Information Daily, a subsidiary of the state-run Xinhua News Agency, cited macroeconomic experts saying that April's CPI could rise by more than 0.5 percentage points from the previous month to 2.0?2.1%. This would be the highest level in five months since 2.3% in November last year (compared to the same month the previous year).

China's CPI soared to 2.3% in November last year amid severe power shortages caused by coal shortages, then recorded 1.5% in December, 0.9% in January, and 0.9% in February this year. During the same period, the PPI showed a high growth rate of 8.3?10.3% compared to the same month the previous year. Since the PPI reflects fixed costs such as raw material prices and wages, it is an indicator to gauge the degree of inflation and a leading indicator of the CPI. However, the CPI growth rate has been limited so far.

The consensus is that China's low consumer price inflation rate stems from an optical illusion caused by the collapse of pork prices. Pork prices in China have plummeted since the end of last year, falling to less than half of usual prices. Livestock farmers, worried about rising feed prices, rushed to slaughter pigs, flooding the market with pork.

Within China, attention is being paid to the fact that the downward trend in pork prices has stopped. China Economic Information Daily reported that as of the end of March, the total number of sows in China was 41.85 million, down 830,000 from 42.68 million in the previous month. The National Bureau of Statistics judged that the possibility of further declines in pork prices is low and forecasted that pork prices will gradually return to a normal range.

Li Chao, chief analyst at Zheshang Securities, pointed out, "It is necessary to pay attention to the fact that the decline in pork prices has stopped." He added, "Due to COVID-19 in April, logistics in some regions were restricted, and food supply was very tight. Among 28 key monitored items, 7 items increased by more than 12% in wholesale prices, and major fresh products such as eggs and vegetables are estimated to have risen by more than 17%."

Dong Chi, chief analyst at Guotai Junan Securities, said, "Pork prices are still lower than usual years but there will be no further decline," and forecasted, "The number of breeding pigs will decrease for the time being due to the reduction in sows."

China Economic Information Daily diagnosed that due to complex domestic and international factors such as the ongoing confrontation between Russia and Ukraine and supply shortages caused by the spread of COVID-19, prices may rise for the time being.

This year, the Chinese leadership's target for consumer price management is 3%. As of the first quarter, items closely related to daily life such as edible oils (3.8%), vegetables (3.7%), seafood (5.9%), fruits (6.9%), eggs (3.8%), transportation and communication costs (3.3%), and transportation fuel (22.6%) have already far exceeded the government's target.

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