China’s inflation is at a five-year low, and pigs may be playing a big part in the concern over deflation.
According to the Wall Street Journal, pork prices make up about 10-15 per cent when measuring CPI and inflation.
Since pork prices fell 4.3 per cent last year, this could be a key reason why consumer inflation has seen surprisingly low growth, at an average of 2 per cent for 2014. Other causes include falling oil prices and a slowed housing market.
The article connects the decline in pork prices with Chinese President Xi Jinping’s campaign against corruption and extravagant spending. Households are cutting down on pork, which is a large part of the Chinese diet.
“What’s different this time around is that the government’s [anti-extravagance] campaign has changed pork consumption and thus the cycle of pork prices,” economist Zhou Hao told WSJ. “Things are different now. I just don’t see any signs of recovery in pork prices any time soon.”
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