How much contribution will pork make to CPI in August?

Data released by the National Bureau of Statistics show that CPI fell for the third month in a row in July, and some analysts believe that it is mainly due to a marked drop in pork prices.

As a matter of fact, this is not the first time that the "second brother" has come out to interfere with people's judgment on inflation. Since 2004, there has been a debate about whether the rise in CPI is caused by the "pig cycle" (or structural price increases) or inflation. However, from the historical data, the pork price and CPI (consumer price index) trend fit is still very high, the correlation coefficient is as high as 0.88 from 2005 to the present. When pig prices rise by more than 30%, it usually drives more than a percentage point increase in CPI1.

The August CPI will be released next Friday. So what will happen to this data? Before the data are released, we might as well take a look at a set of data related to pork.

According to the latest data released by the General Administration of Customs, China's pork imports in July were 183400 tons, down nearly 10, 000 tons from 194000 tons in June, the first month-on-month decline, but compared with 59000 tons in July last year, the year-on-year increase is still as high as 210%.

Other data show that the country's total pig stock fell 0.1% in July from a month earlier, down 2.4% from a year earlier, the first decline since it slowly rebounded in March this year.

So, since June, the high price of domestic pigs has fallen, and the total stock of live pigs across the country has declined instead of increasing in July. What is the reason? At the symposium on the situation of pig production held by the Animal Husbandry Department of the Ministry of Agriculture on August 24, the reasons for the inactivity of farmers were discussed. They believed that the cost of environmental protection and the policy of restricting and prohibiting raising had a certain impact on pig fencing. In addition, after the "baptism" of several "pig cycles", farmers have become more rational and will no longer "swarm" to make up the fence, and many people even think that prices may not continue to rise next year, so they are more cautious.

So what is the price of pork since August? A new research report released by the Financial Research Center of the Bank of Communications points out that pork prices have dropped month-on-month since August, the specific price of pig grain has fluctuated to about 9.2, and the average price and appearance price of piglets have dropped to 47.1 yuan / kg and 18.6 yuan / kg, respectively, and the number of live pigs and breeding sows have declined since July. Pork prices ushered in the downward phase, the year-on-year increase gradually declined.

Haitong Securities believes that over the years, the relationship between supply and demand tends to be tense between August and October, and there will be a seasonal rebound in pig prices. Coupled with the lagging impact of high temperatures caused by floods, pig prices may still rise in the short term. However, from the perspective of the large cycle, pig prices are already high, and even if they rebound in the short term, they are expected to be very limited.

However, some people with different views believe that pork consumption is expected to increase in the next four months compared with July and August. The stock of 375.96 million pigs in July is still at an all-time low. In the absence of accelerated farmers such as climate and epidemic diseases, in the short term, pig prices are expected to rise at high levels in the next four months.

In fact, in recent years, both the supply side and the demand side of the pig market have undergone earth-shaking changes. We can see that on the supply side, a large-scale "pig war" for the high added value of modern agriculture began as early as a few years ago, not to mention that many celebrities are involved in the pig industry, and even some international capital has directly or indirectly sneaked into the pig industry, and the reshuffle of the pig industry has been initially completed; on the demand side, the structure of people's meat consumption is more diversified, and the proportion of pork in meat consumption has dropped again and again. However, what has not changed is the weight of pork in CPI.

So, will the "second brother" still "arch" the August CPI? Huang Wentao, chief macro analyst at Citic Construction Investment Securities, believes that pork prices fell nearly 10% year-on-year in the first half of August, and fresh vegetable prices fell more year-on-year than in July, so CPI growth is expected to continue to slow in August.