{ "title": "Darn Them Piggies! Pork Prices & the Inflation Outlook for China", "publication": "IMF Blog, September 11, 2011", "sourceUrl": "https://www.imf.org/en/blogs/articles/2011/09/11/pork-prices-and-chinas-inflation-outlook", "canonical": "https://www.imf.org/en/blogs/articles/2011/09/11/pork-prices-and-chinas-inflation-outlook", "overlayPath": "/en/blogs/articles/2011/09/11/pork-prices-and-chinas-inflation-outlook/index.md", "summary": "Author: Nigel Chalk", "sections": [ { "heading": "Overview", "content": "- Author: Nigel Chalk\n- Date: September 11, 2011\n- Central message: China’s inflation has been driven largely by volatile food prices rather than generalized overheating; a recent pork price shock delays but does not fundamentally alter the IMF team’s view that inflation should peak and then decline." }, { "heading": "Inflation drivers and structural context", "content": "- China exhibits chronic excess capacity in a range of highly competitive manufacturing sectors, limiting firms’ pricing power.\n- There remains an overall excess supply of labor in China (despite shortages of highly skilled workers), which helps keep wage growth from getting too far ahead of productivity.\n- Investment is very high: the economy is investing almost half of its GDP.\n- Two distinct manifestations of demand pressures:\n - Asset price inflation, notably property prices, where administrative measures are used to restrain bubbles.\n - Large and volatile food-driven inflation, due to tight supply-demand balances and weak/sluggish supply responses." }, { "heading": "Food supply vulnerabilities and quantitative exposure", "content": "- China both produces and consumes:\n - one-sixth of the world’s wheat,\n - one-fifth of the world’s corn,\n - one-third of the world’s rice,\n - one-half of the world’s pigs.\n- The agricultural structure and limited agricultural land constrain effective domestic supply responses.\n- Food shocks are mostly domestically driven and cause amplified impacts on raw food prices; global food price increases exacerbate the situation.\n- Pass-through dynamics:\n - Initial shocks to raw food seep into other consumption items and nonfood inflation.\n - These effects typically dissipate after about 6-12 months.\n- Macro policy can dampen pass-through from food to other items but cannot directly address the fundamental supply-side sources." }, { "heading": "Recent episode chronology and role of pork", "content": "- Early 2010: initial shock concentrated in fresh fruit, vegetables and grain in the first half of 2010, due mostly to weather.\n- Late 2010: inflation began feeding through to other items, coinciding with a moderate easing of credit conditions toward the end of 2010.\n- Spring of this year: inflation momentum started to fizzle, partly dampened by a tightening of macroeconomic policies.\n- July: inflation peaked in July and was expected to retreat in the latter part of this year.\n- Disruption: a hog cycle, compounded by localized pig disease, caused pork prices to skyrocket and re-start the transmission mechanism into broader inflation.\n- Outlook for the pork shock:\n - The current food price shock should be smaller than in the past because the hog-cycle will soon turn.\n - The shock will postpone the return to lower inflation, but the effects should wash out reasonably quickly." }, { "heading": "Policy implications and recommendations", "content": "- Given the ongoing transmission from pork prices into broader inflation, it would be premature to backpedal on macroeconomic tightening.\n- Use of administrative measures for asset-price (property) bubbles remains relevant.\n- Recognize limits of macro policy: it can help dampen pass-through but cannot substitute for addressing structural agricultural supply constraints.\n\nIMF blog post: Darn Them Piggies! Pork Prices & the Inflation Outlook for China (Nigel Chalk, September 11, 2011).\n\n---\n\n Content in this bundle\n\n- iMFdirect 博客: 可恶的小猪！中国的猪肉与通货膨胀, 2011 年 9 月 11 日\n - iMFdirect 博客: 可恶的小猪！中国的猪肉与通货膨胀, 2011 年 9 月 11 日 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - iMFdirect 博客: 可恶的小猪！中国的猪肉与通货膨胀, 2011 年 9 月 11 日 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- https://www.imf.org/wp-content/uploads/2011/09/angry-birds-green-pigs.jpg\n- wrote about this recently\n- https://www.imf.org/wp-content/uploads/2011/09/apd-china-pork-prices-inflation.jpg\n\nSource: https://www.imf.org/en/blogs/articles/2011/09/11/pork-prices-and-chinas-inflation-outlook" } ], "bullets": [ "[Markdown version](/en/blogs/articles/2011/09/11/pork-prices-and-chinas-inflation-outlook/index.md)", "[Structured JSON version](/en/blogs/articles/2011/09/11/pork-prices-and-chinas-inflation-outlook/index.json)", "[Bundle manifest](/en/blogs/articles/2011/09/11/pork-prices-and-chinas-inflation-outlook/bundle-manifest.json)", "Authors: Nigel Chalk", "Published: September 11, 2011", "Author: Nigel Chalk", "Date: September 11, 2011", "Central message: China’s inflation has been driven largely by volatile food prices rather than generalized overheating; a recent pork price shock delays but does not fundamentally alter the IMF team’s view that inflation should peak and then decline.", "China exhibits chronic excess capacity in a range of highly competitive manufacturing sectors, limiting firms’ pricing power.", "There remains an overall excess supply of labor in China (despite shortages of highly skilled workers), which helps keep wage growth from getting too far ahead of productivity.", "Investment is very high: the economy is investing almost half of its GDP.", "Two distinct manifestations of demand pressures:", "China both produces and consumes:", "The agricultural structure and limited agricultural land constrain effective domestic supply responses.", "Food shocks are mostly domestically driven and cause amplified impacts on raw food prices; global food price increases exacerbate the situation.", "Pass-through dynamics:", "Macro policy can dampen pass-through from food to other items but cannot directly address the fundamental supply-side sources.", "Early 2010: initial shock concentrated in fresh fruit, vegetables and grain in the first half of 2010, due mostly to weather.", "Late 2010: inflation began feeding through to other items, coinciding with a moderate easing of credit conditions toward the end of 2010.", "Spring of this year: inflation momentum started to fizzle, partly dampened by a tightening of macroeconomic policies.", "July: inflation peaked in July and was expected to retreat in the latter part of this year.", "Disruption: a hog cycle, compounded by localized pig disease, caused pork prices to skyrocket and re-start the transmission mechanism into broader inflation.", "Outlook for the pork shock:", "Given the ongoing transmission from pork prices into broader inflation, it would be premature to backpedal on macroeconomic tightening.", "Use of administrative measures for asset-price (property) bubbles remains relevant.", "Recognize limits of macro policy: it can help dampen pass-through but cannot substitute for addressing structural agricultural supply constraints.", "**iMFdirect 博客: 可恶的小猪！中国的猪肉与通货膨胀, 2011 年 9 月 11 日**", "[https://www.imf.org/wp-content/uploads/2011/09/angry-birds-green-pigs.jpg](https://www.imf.org/wp-content/uploads/2011/09/angry-birds-green-pigs.jpg)", "[wrote about this recently](http://blogs.imf.org/2011/08/09/whack-a-mole-in-china%e2%80%99s-bubbly-housing-market/)", "[https://www.imf.org/wp-content/uploads/2011/09/apd-china-pork-prices-inflation.jpg](https://www.imf.org/wp-content/uploads/2011/09/apd-china-pork-prices-inflation.jpg)" ], "related": [ { "title": "iMFdirect 博客: 可恶的小猪！中国的猪肉与通货膨胀, 2011 年 9 月 11 日", "role": "document", "sourceUrl": "http://www.imf.org/external/chinese/np/blog/2011/091111c.pdf", "summary": { "path": "/external/chinese/np/blog/2011/091111c.pdf.md", "mime": "text/markdown" }, "binary": { "path": "/external/chinese/np/blog/2011/091111c.pdf", "mime": "application/pdf" } } ], "alternates": { "markdown": "/en/blogs/articles/2011/09/11/pork-prices-and-chinas-inflation-outlook/index.md", "json": "/en/blogs/articles/2011/09/11/pork-prices-and-chinas-inflation-outlook/index.json", "bundleManifest": "/en/blogs/articles/2011/09/11/pork-prices-and-chinas-inflation-outlook/bundle-manifest.json" }, "generatedAtUtc": "2026-08-28T14:42:26.835Z" }