Chinese producer pricers remained in deflationary territory last month as soaring pork prices left consumer prices unchanged at a high 2.8% annual rate.
China’s National Bureau of Statistic said producer prices (PPI) dropped 0.8% in August from the same month in 2018, the biggest year on year contraction for three years.
August fall was much larger than the 0.3% drop in July which was the first fall in three years.
It was confirmation the weakness in domestic and export demand is driving down prices across the country’s huge manufacturing and utility and mining sectors.
The deflation helps explain the cut in bank reserve ratios last Friday from the central bank.
But consumer prices remain elevated because of the spreading impact of the African swine fever epidemic is having on China’s pork industry.
The annual consumer price index (CPI) was unchanged at 2.8% year-on-year, from July. That compared with the 2.6% increase market forecast.
The country’s statistics bureau said pork prices were up 46.7% in August from the same month in 2018, because of the epidemic of swine fever.
That rise was substantially ahead of the 27% jump in prices seen in July and tells us the impact of the epidemic is intensifying, not moderating as millions of animals are killed to try and prevent the spread of the disease.
August’s surge in pork prices contributed to a 10% gain in food prices overall in August, according to the Bureau of Statistics on Tuesday.
The soaring pork price is also seeing other meat prices rise as consumer switch to cheaper products.
The Statistic Bureau data shows that beef, mutton, and chicken prices were all up in August— between 11.6% and 12.5%.