Chinese food prices increase week by week

The prices of food and other commodities in China increased sharply in October, increasing pressure on policymakers to achieve the goal of stabilizing growth.

Food prices in China increased by 4.3% in the last week of October. Photo: AFP

According to China’s Ministry of Commerce, food prices increased weekly in October. Vegetable prices in China reached 5.99 yuan/kg (equivalent to 2.06 USD/lb) in the last week of October, an increase. 6.6% from the previous week.

CNBC quoted the latest weekly report published by the Ministry of Commerce of China, saying that food prices in the last week of October in the country increased by 3.7% compared to the previous week, while the price of pork increased by 10. 6% and eggs increased by 6.4%. Collectively, food prices in China increased by 4.3% in the last week of October.

In a recently published assessment report, Economist Robin Xing and associates from investment bank Morgan Stanley predict that China’s consumer price index growth rate in October is likely to double and is largely due to food price inflation, in the price of green vegetables increased due to a decrease in supply due to adverse weather.

However, Morgan Stanley experts predict that China’s October CPI will increase by 1.5%, which is a relatively low increase. According to Robin Xing, Chinese consumer demand has decreased, especially after the authorities tightened travel restrictions to control the sudden increase in Covid-19 cases in the country. the last few days.

In September, China’s CPI inched up only 0.7% year-on-year as food prices fell by as much as 5.2%.

In contrast, the producer price index (PPI) in September rose a record 10.7% year-on-year. Rising raw material costs have dented the profits of manufacturers in China.

Based on data analysis, Mr Bruce Pang, Head of Macroeconomics and Strategy Research at China Renaissance Financial Institution predicted that the PPI in October will probably set a new record with an increase of about 11-12% over the same period last year.

According to this expert, inflation pressure and the tightening trajectory of other countries’ monetary policies will “hold back” China from loosening monetary policy.

The limited capacity for monetary policy easing means that China will need more support from fiscal and industrial policies to prevent inflation. In economics, stagflation is defined as a phenomenon in which the economy stagnates, growth slows down but inflation and unemployment rates remain high.

However, Mr. Bruce Pang believes that the Chinese economy can still grow about 4-5% in the fourth quarter of 2021.

The US Federal Reserve (Fed) has just announced that it will begin to reduce its asset purchase program and move towards tightening monetary policy. Meanwhile, the Central Bank of China (PoBC) has yet to give a clear signal whether it will take the same move as the US.