Robert Carnell, the Chief Economist and Head of Research at ING, notes that inflation in China in November rose further to 4.5% YoY, but there are clear signs that it is peaking.
- "Newswires running headlines like "China November inflation highest since 2012" entirely miss the point. Inflation in China has been driven higher by rising pork and consequently other meat prices. This is fallout from the African Swine Fever (AFS) epidemic that has killed half of the hog population in China.
- In November, pork prices rose 3.8% MoM. But this was way down from the 20.1% increase in October, the 19.7% MoM increase in September, and the 23.1% increase in August. In fact, it was the lowest increase since June (3.6%MoM).
- The reasons for this moderation are various but include:
- Higher pork imports, including from the US alleviating supply shortages
- Mobilization of the strategic pork reserves (frozen pork warehoused for emergencies)
- A decrease in new reports of African Swine Fever (AFS) and rebuild of stocks."