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Soaring price for meat, eggs likely to affect CPI
POSTED: 9:45 a.m. EDT, May 24,2007

Prices for pork and eggs kept soaring over past weeks on Chinese market due largely to tight supply and increasing production cost.

Sources with the Ministry of Agriculture said on Wednesday that if the prices linger at high notch, the country's consumer price index (CPI), a major indicator for inflation, will be affected. CPI reached the alarm level of three percent in April.

Foodstuff has a weight of 33 percent of CPI in China, and meat, poultry and related products, 20 percent or so.

According to the Ministry of Agriculture, in April live pigs nationwide were priced 71.3 percent higher than a month earlier, and pork, 29.3 percent higher. Meanwhile, price of eggs rose 30.9 percent.

In Beijing, price of slaughtered pigs went up more than 30 percent in recent days, while that of eggs rose to record high for past five years.

Wholesale price of pork in Shanghai has hit 16 yuan (2.1 U.S. dollars) per kilogram, a record high for recent 10 years, up 20 percent month-on-month.

The wholesale price was even higher in Hangzhou, capital city of east China's Zhejiang Province.

"I bought the pork at 17 yuan/kg from a distributor on Monday, and the price kept changing day by day. I have no other choice but raise retail price,"complained Jin Qiuhua, a local retailer, at a pork stand in a marketplace of Maolang Lane, Hangzhou.

"I've sold pork for more than 20 years, such a continuous price hike was only seen in 1994,"said Lu Youzhong, another pork retailer in the city.

Along with temperature hikes, blue ear disease broke out among pigs in south China, causing many deaths and a large amount of pigs to be eliminated. The result was a deficit in supply that has to be fulfilled by northern provinces.

"This sent a strong signal for distributors to jack up prices, "said Xu Lianzhong, a senior economist with the price supervision center under the National Development and Reform Commission.

Actually, demand and supply remained unbalanced over the past few years, Xu noted.

"Pig raisers kept making losses over the past couple years and they are reluctant to raise pigs. This led to a marginal decline in stock for the current year."

Still worse, edible oil and grains underwent price hikes at the beginning of this year, and feed prices followed suit. The mounting raising cost for pigs and poultry brought about price hikes for pork and eggs, according to Xu.

Grain prices, which are to be affected by an expected decline in grain output this summer, will continue to increase by small margins in the coming weeks, boosting prices of pork and eggs, Xu said.

Xu predicted that egg prices would stabilize in a short period of time as egg supply can be replenished quickly, but it was difficult for pork prices to adjust downward in one to two months due to longer production cycle.

However, Xu said, pork prices have already peaked and have little room to go up further.

It is reported that related authorities have begun to pay attention to price hikes for pork and eggs. Some government departments have dispatched inspectors to pork markets around the country to carry out investigations.

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