China's Inflation Rises to Seven-Year High on Soaring Pork

[TexasTowelie]

China’s consumer inflation rose to a seven-year high last month on the back of rising pork prices, complicating policy makers’ decision on whether to further ease funding for the country’s weakening industrial sector.

• The consumer price index rose 3.8% in October from a year earlier, up from 3% in the previous month.
• Factory prices fell by 1.6%, compared with the median estimate for a drop of 1.5%.

Key Insights

• While monetary policy isn’t the solution for rising pork prices caused by a supply shock, the People’s Bank of China has stayed relatively restrained compared with other major central banks even as growth has slowed. The bank offered a mini cut to the interest rate of 1-year bank funding this week amid a bond sell-off, while keeping the overall liquidity supply neutral.
• “The surging CPI inflation is due to supply (mostly pork price) and the worsening PPI deflation is due to demand,” said Larry Hu, head of China economics at Macquarie Securities Ltd. in Hong Kong. “Ideally monetary policy should respond to demand instead of supply. In reality, the PBOC is likely to strike a balance between PPI and pork price.”
• While further monetary stimulus would help companies struggling with weakening demand, deflation and higher tariffs, even faster inflation would hurt households more.
• “Persistent deflation in the industrial sector squeezes profitability -- reducing leeway for investment and hiring,” David Qu, economist at Bloomberg Economics in Hong Kong, wrote in a note.

Read more: https://www.bloomberg.com/news/articles/2019-11-09/china-s-inflation-rises-to-seven-year-high-as-pork-prices-soar?srnd=premium

[soryang]

1. African swine fever is out of control in Asia

Pig deaths on Chinese/Russia border: African swine fever spreads?
Russian authorities report almost 60 outbreaks in wild and domestic pigs, most within miles of the border with China.

by By Jason Gale • Bloomberg
1 Nov 2019

https://www.aljazeera.com/ajimpact/pig-deaths-chineserussia-border-african-swine-fever-spreads-191101222724188.html

Infected wild boar may be playing a role in cross-border spread, said Dirk Pfeiffer, a professor of veterinary medicine and life sciences at City University of Hong Kong. "Wild boar are very likely to now also be infected in northern China," Pfeiffer said.

While the Far East accounts for less than 2% of Russia's swine herd, the virus's persistence in wayward, wild animals may frustrate attempts to control the disease on both sides of the border. In China, African swine fever has reduced the nation's pig herd by almost half, causing record-high pork prices and a shakeup of its $118 billion industry.

Experience in Europe with African swine fever has shown that once the disease becomes established in wild pigs, it's "extremely difficult to control it in both wild and domestic pigs, especially when the wild population is dense and swine production is characterized as extensive, semi-intensive or 'backyard'," said Andriy Rozstalnyy, an animal health officer with the Food and Agriculture Organization of the United Nations in Rome.

The epidemic has spread through North Korea to South Korea as well. Infected dead carcasses of wild pig have been found near the DMZ in South Korea. Yesterday the capture of the first live infected wild pig was reported. Naturally, domestic pigs in the region in northwest South Korea have been infected as well and efforts to contain the outbreak have been underway. The South Korean government has reported that efforts to inhibit the continued threat of the spreading epidemic are frustrated by the lack of cooperation by North Korea.

South Korea has been on its highest alert after its first outbreak of the deadly hog disease on Sept. 17, ramping up disinfection measures and putting a temporary nationwide ban on the transport of hogs and related livestock.

https://www.reuters.com/article/us-southkorea-swinefever/south-korea-confirms-new-cases-of-african-swine-fever-in-north-korea-border-town-idUSKBN1WH093