CPI growth projected to fall due to lean hog season

Financial institutes said China's Consumer Price Index growth rate will fall to around 1.2 percent in June year-on-year mainly due to the drop in hog price, the Economic Information Daily reported on Thursday.

The pork price slid more than 10 percent due to a continuous increase in hog production capability and a traditional low season of May and June for pork consumption, said Li Chao, chief economist from Zheshang Securities.

The sharp drop of hog price caught the attention of the administrative body. A plan on guarantying steady pork price was rolled out by the National Development and Reform Commission with other four government bodies on June 9.

On June 28, the NDRC said that the hog-to-grain ratio stood at 4.9:1, entering Level 1 early warning spectrum. On July 5, the Ministry of Commerce said the purchasing and storage for the first batch of 20,000 metric tons of central reserve frozen pork would start on July 7.

The downside in short-term of pork price is limited in the wake of the implementation of the purchasing and storage of central reserve pork and the coming peak season in the third quarter for pork consumption, said Gao Ruidong, chief macroeconomist at Everbright Securities.