China's Consumer Price Index reports 4.9% year-over-year increase in food prices in June; domestic agricultural product prices will hold stable as supply abundant, terminal demand tepid in low season for consumption, analysts say

Nevin Barich

BEIJING , July 9, 2013 (Xinhua News Agency) – China's Consumer Price Index (CPI), a main gauge for inflation, rose 2.7 percent year on year in June with food prices increasing 4.9 percent and non-food prices gaining 1.6 percent, according to data released by the National Bureau of Statistics on Tuesday.

Analysts from Xinhua News Agency predict that the domestic agricultural product prices will hold stable as supply is abundant and the terminal demand is tepid in the low season for consumption.

Affected by the government's release of reserve rice and the food safety scandal involving cadmium-tainted rice, the country's rice market is seeing lackluster demand and low prices. Meanwhile, the flour market trading is smooth and prices are difficult to rise as new wheat supply is increasing.

At present, the nation's live pig stocks are at a high level and pork prices are expected to stabilize in the summer slack season for meat consumption.

Although pork prices have shown signs for recovery after depression in the past several months, the oversupplied pork market is unlikely to change in the short term. Data from the Ministry of Agriculture showed that the country's live pig stocks in May edged up 0.7 percent over a month earlier with sow inventories unchanged month on month.

Besides grain and pork, the domestic edible oil prices still have room to decline further.

Since the beginning of this year, international soybean prices have been falling with soy oil prices cumulatively down about 15 percent to around 7,500 yuan/tonne. The peanut oil prices, which had increased persistently from 2010, also began to fall this year. Although domestic edible oil prices have kept dropping for nearly two months, sales have yet to increase obviously and inventories still stay at high levels. Many oil brands continue to reduce their soy oil and blend oil prices. (Edited by Liu Xiaoyun, liuxy08@xinhua.org)

(c) 2013 Xinhua News Agency

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