Chinese Consumers Avoid Purchasing Pork During the Spring Festival Amid Inflation Fears
Ahead of China’s biggest holiday, Lunar New Year (Chinese New Year), the consumption of pork, an essential holiday food, is hardly recovering. With a stagnant economy, the Chinese are not opening their wallets, and fears of deflation (price fall in a stagnant economy) are growing.
On the 3rd, Bloomberg reported that the drop in pork consumption in China ahead of Lunar New Year reveals serious economic problems.
A merchant in Beijing’s market revealed that although pork prices have fallen by about a fifth compared to last year, sales volume has decreased by about a third compared to the usual holiday period. A pork supplier in eastern China also said that migrant workers used to spend about 1,000 yuan (approximately $155) to buy pork for Lunar New Year, but now they spend only about 300 yuan (approximately $46) or do not buy at all.
Bloomberg pointed out, “Pork demand in China has slowed down over the past few months, but demand is still weak even as the peak season approaches. Wage cuts are impacting households and putting pressure on consumer prices, sending a strong message about the world’s second-largest economy’s consumption and oversupply of pork.”
According to consulting firm Shanghai JCI, China’s pork consumption last year was about 54 million tons, a decrease of 1 million tons. Considering the significant increase in production due to the reopening of economic activities last year, it is interpreted as a considerable decrease.
China is the world’s largest pork-consuming country, and pork prices account for the largest share of China Consumer Price Index (CPI). China’s CPI has recorded negative growth for three consecutive months until last December, and in December, pork prices fell by 26.1%, causing the CPI to fall by 0.3% compared to the same month last year. In fact, due to the economic downturn last year, pork prices plummeted by more than 40% annually due to reduced consumption.
Chinese authorities are working to prevent deflation concerns due to falling pork prices. Especially as consumption does not increase even as pig farming scales up, they are concerned about losses to pig farms due to oversupply and have also stepped in to reduce pig production. Lei Ryu-gung, head of the Ministry of Agriculture and Rural Affairs, argued, “The number of pigs is still high, so the slaughter will continue for the next one or two months and the price decline will continue, but if the number of breeding sows decreases, it will help the market recover in the second quarter.”