[Correspondent Diary] Money, Money, Money... China's 'Dwaen' Obsession

Concerns Over Pigflation Resurface as Pork Prices Rise
Consumer Prices Hit 23-Month High Amid Rising Pig Prices in China

[Asia Economy Beijing=Special Correspondent Jo Young-shin] 'Don (豚)', 'Jeo (猪)', 'Hae (亥)', 'Si (豕)'. All are Chinese characters meaning pig.

Recently, the word 'Jeo (猪)' has frequently appeared in Chinese media. It refers to pork, and many articles reported that pork prices have surged.

Articles related to pork were also common at the end of last year and the beginning of this year. Due to the sharp rise in international grain prices such as soybeans and corn, pig feed costs increased significantly, prompting pig farmers to rush to slaughter pigs, which caused pork prices in the market to drop by half. When supply increases, prices naturally fall.

This time, the articles are quite the opposite. Pork prices have surged. As of the 4th, the average wholesale price of pork exceeded 21 yuan per kilogram, marking a price increase of more than 20% in just two weeks. From the 1st to the 7th, the average wholesale price of pork was 26.58 yuan per kilogram, up 16.8% compared to the same period last month. The rise in futures prices is even steeper. The live pig futures price settled on the 4th was traded at 22,695 yuan per ton, about a 40% increase from the March low.

China is the world's largest pork consumer (estimated to consume 2.5 times the global per capita consumption), to the extent that the term Pigflation has emerged. Therefore, pork is considered a major item that stimulates China's consumer prices.

The fact that Chinese media have released many articles related to pork prices is a kind of advance notice that the Consumer Price Index (CPI) will rise.

In fact, the CPI for June announced by China's National Bureau of Statistics on the 9th rose 2.5% year-on-year. This is the highest in 23 months since July 2020 (2.7%). China's consumer price inflation rate had remained in the 1% range since November last year but rose to 2.1% in both April and May, entering the 2% range.

Source: National Bureau of Statistics of China

Although pork prices have risen significantly recently, as of the end of June, they are still down by 6%. Because prices had fallen so much, they have not yet reached the usual level. If they reach the usual level, China's consumer prices could rise further. Moreover, if they exceed the usual level, the Chinese government may fail to meet its annual consumer price target (around 3%) promised at the beginning of the year.

Prices reflect public sentiment. This is true in any country. In severe cases, riots may occur. On the 4th, the National Development and Reform Commission (NDRC), which oversees China's economy, hurriedly convened an emergency meeting and announced policies to stabilize pork prices.

If pork prices in China surge, China will likely increase pork imports, which will raise pork prices worldwide. The rise in Chinese pig prices is not just a matter for other countries. The fact that Chinese media are talking about Don (豚) indicates that abnormal signs have appeared in prices.

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