China's CPI hides big price drops for some items

 China's November Consumer Price Index was up 0.2 percent. The food component was up 0.9 percent, but that number hides a lot of big price declines for agricultural goods further up the supply chain. The table below compares year-on-year changes in select food categories from the November CPI report with year-on-year price changes calculated from several other November price data reports from China. 

For example, the CPI reported a 1.1 percent decline, but other data sources reported 18 and 19-percent declines for wheat, a 17 percent decline for flour, and price declines of as much as 4-to-6 percent for rice. 

Beef prices are down 13.5 percent in the CPI and down 18.3 percent in the Ministry of Agriculture's wholesale price report. Milk prices are down 1.4 percent from last year in the CPI, but raw milk is down 15.2 percent according to the agriculture ministry's wholesale price data.

Apples and potatoes are down about 10 percent from last year. 

The main components of animal feed were down by double-digits. Corn prices were down 18-to-21 percent and soybean meal was down 24-to-26 percent from a year ago. 

In contrast, pork prices are up about 14 percent from their depressed level of a year ago in the CPI and in wholesale price databases (but still below their level from November 2022) as many producers have cut back on production capacity after financial losses last year. With higher pork prices and lower feed prices many pig farms are seeing a reverse of last year's steep losses. 

Vegetables are another item with higher prices this year. The CPI vegetable component was up 10 percent from a year ago, probably reflecting the impact of summer flooding. According to MySteel agricultural price reports, garlic and chili peppers are up more than 20 percent and ginger is up 16.5 percent from last year. 

The declines in many prices reflect weak demand, the influence of sinking global prices for many agricultural commodities, and a deflating economy. The declines are consistent with anecdotal reports from China of food bargain-hunting, popular cut-price buffets, and more cooking at home to save money.