Will China’s appetite for pork spike inflation in 2018?

China eats and produces about half of the world’s pork, and the number is only expected to grow in coming years. Bloomberg reports that the continued appetite may contribute substantially to inflationary pressure in the next year, due to two trends:

• Food prices in general are “one of the biggest factors in consumer inflation,” and in China, pork “accounts for almost 3 percent of the consumer price index,” according to Citic Securities Co.
• Although the price of pork has been declining this year due to cheaper corn and greater production, the “losses have been narrowing over the past four months.”

Reuters adds that “China’s pig herd shrank in October by the most in close to two years,” as a “crackdown on farm pollution…has forced hundreds of thousands of farms to close in the past year.” As China does not just eat the most pork, but also produces much of what it eats — 55 million tons produced each year — the reduction in supply could also add to inflationary pressure.

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