Will pork appreciation lead to inflation?

(People's Daily) The price of pork in China has been rising for a couple of months now, with a new uplift record in 3 years. According to the National Bureau of Statistics (NBS), starting in March, the price of pork has been rising for 4 months with a total of a 5.7 yuan rise. In China, the price on pork is closely related to the CPI (Consumer Price Index). Experts interpret that the price of pork will keep on rising and drive the rise of CPI at the same time. Consequently, the CPI of the latter half of the year is expected to be a little higher than the first half of the year, but there is no strong sign of inflation.

Statistics of NBS show that from March 18 to July 20, the price of pork has risen almost 50 percent. 

The current price on pork ranks the highest since the year of 2012. Based on previous experience, the price on pork usually would have an "outburst" every 2 to 3 years. The last "pork cycle" happened during June 2010 to June 2011. It seems like a new round of the “pork cycle” is around the corner. 

Because of being under the oversupply for a long period of time, many small and medium-sized farmers' quit their jobs- a major driver of appreciation.

In China, the price of pork is one of the main components of the CPI. In 2010, the rise in the price of pork and vegetables was taken as the dominant factor that caused the rise of CPI in the fourth quarter. 

This year, with the price of pork rising, the CPI in some places has obviously been affected.

Experts from the Institute of Finance at the Chinese Academy of Social Sciences claims this price-rising cycle will last to March 2016, with an even higher uplift than the one in 2011, as well as its influence on CPI. Though the price of petroleum is dropping, experts predict that the CPI is expected to rise to 3 percent in the latter half of the year.

However, there are also some others that think the CPI would not be negatively affected since the overall price level is still low despite the price of pork is rising. 

Source: People's Daily by Yao Xinyu