Is Chinese inflation rising due to African swine fever?

Inflation in China could rise for the first time in 10 years due to the many outbreaks of African swine fever, according to a study by Capital Economics. In addition, the outbreak in Vietnam is seen by various analysts as the 'worst case scenario'. What's up with that?

According to researchers at Capital economics measures to tackle the virus are ineffective, which could push inflation above target for the first time in 10 years. The research firm reports that the pig price will be about 2020% higher in early 80 than 1 year earlier, which will affect the Chinese consumer price index. Based on that, it outlines that inflation will average 3,5%, peaking above 4%. "That is well above the annual target of 3% set by the central bank," the report said.

China has been struggling for months with a shortage of pork, the most widely consumed meat in the country, due to all the outbreaks of African swine fever. This shortage has already caused pig prices to record highs have risen, but is now also driving consumer prices up at a rapid pace. Between March and August, prices have increased by 2,3%.

'Ineffective measures'
China last week reported that it will issue subsidies of up to 5 million yuan (about $640.000) in hopes of boosting pork production. This money is to be used, among other things, for the construction of large-scale pig farms. "We need to increase the pork supply in every possible way, curb market speculation, boost the production of alternative meat products and increase frozen pork reserves," Deputy Prime Minister Hu Chunhua said in a statement in late August.

However, the researchers believe that the above measure is ineffective. "Although pork production will increase in the medium term, the recently issued subsidies are too small to change the big picture," they write. According to them, the reserves should be used more actively. However, this is a relatively short-term solution, as the Chinese government only stocks pork for 3 to 4 days.

Situation in Vietnam worse than in China
Although the situation in China is dire, the situation in Vietnam is seen as the 'worst case scenario'. No fewer than 2 million pigs have been culled in that country in the past 4,5 quarters. By comparison, so far 'only' 1,17 million pigs have been culled in China. A total of 63 regions in Vietnam have been infected with the virus. The sharp decline in the pig herd also means that the country is for the first time in years the world market must enter for pork.

Kimberly Baker

Kimberly Bakker is an all-round editor at Boerenbusiness. She also has an eye for the social media channels of Boerenbusiness.

k.baker @boerenbusiness. Nl

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