CPI expected to keep rising until June: expert
Soaring prices of vegetables and meat, particularly those of pork which have surged to a four-year high, have been drawing increasing public ire in recent months, prompting expectations of rising inflation.
Analysts said that the central bank may become more cautious in further loosening monetary policy, though previously accommodative monetary measures had been expected as a result of the country's continuing downward economic pressure.
Vegetable prices in Beijing, for example, have risen in the past two months by more than 50 percent on average compared to the same period last year, according to local media reports.
The price of scallions, one of the daily food staples of people from northern China, have more than doubled from last year.
Pork prices are also continuously rising. "I may buy less pork if it gets more expensive," Zhu Yuling, a 55-year-old Beijing resident, told the Global Times on Monday.
A survey released by the People's Bank of China (PBC) on Thursday showed that 52.7 percent of respondents across China believe current prices are "unbearably high." And the index measuring people's satisfaction to prices has dropped to 25.2 percent in the first quarter, down 1.1 percentage points over the previous quarter.
Rising inflationary pressure
Experts noted that inflationary pressure would build up in the first half of this year given rising food prices, which accounts for around one-third of China's consumer price calculation.
Pork weighs heavily on the food basket. Wholesale pork prices stand at 25-30 yuan ($3.86-$4.63) per kilogram, according to data from industry portal 21food.cn, up over 30 percent year-on-year.
"Pig farms had been incurring losses back in 2013 and 2014, and many of them had to downsize their farms or close down," Li Chengwen, a pig farmer in Changchun, Northeast China's Jilin Province, told the Global Times Monday, noting that their exit has affected the industry's ability to rebuild herd in the short term.
In February, China's Consumer Price Index (CPI), a main gauge of the inflation, edged up to 2.3 percent after having been under 2 percent for five consecutive months, data from the National Bureau of Statistics (NBS) showed. And the bureau said high pork prices have been a major reason behind the February spike.
The CPI reading will climb further as food prices continue to surge, analysts said. "The CPI reading may rise to 2.5 or 2.6 percent in March," Liu Xuezhi, a senior analyst at Bank of Communications in Shanghai, told the Global Times Monday, noting that the CPI's upward trend would continue at least in the first half of the year.
The NBS is set to release the March inflation rate on April 11.
Policy impact
The rising inflation rate may in turn influence the country's policy directions. China has cut interest rates and banks' reserve requirements (RRR) five times since 2015 in a bid to inject liquidity into the market. In its latest loosening move, the PBC cut the RRR by 0.5 percentage points on February 29.
Experts and research institutes have been expecting more accommodative monetary policies this year. However, due to rising inflation pressure as well as the easing of the downward pressure on the economy, more relaxed monetary tools may be used "less frequently" this year, as increased liquidity itself is also an important factor in driving up inflation, Liu said.
But the good news is pork prices may ease during summer, an off-season for pork production, which could help to ease inflationary pressure.
Ma Wenfeng, a senior analyst at the agricultural information portal en.cnagri.com, said pork prices may ease in July or August, when many pig farmers would have finished restocking. Ma added that increasing pork imports would also weigh down the current trend.
