Seafood helps drive China’s inflation rebound

News 10:49 13/09/2014
(SeafoodSource) Inflation figures for seafood outpaced price rises in other food categories as China’s consumer price index (CPI) inched back up in March, according to figures published this week by the National Bureau of Statistics in Beijing.

Food prices have been blamed for a rebound in inflation in China, to 3.6 percent in March from a low of 3.2 percent in February. A weakening of China’s import growth, meanwhile, has led to concern that demand in China is softening.

Seafood prices increased 11.4 percent year-on-year in March, compared to a 7.5 percent rise in February. A 13.2 percent rise in January is easily explained by a spike in Chinese New Year demand. However, price increases had ebbed each month since, from a 15 percent rise in July 2011 to a 9.7 percent rise in December.

A local seafood trade body sees the price rises as seasonal rather than an indication of deeper economic malaise. Speaking to SeafoodSource, Cui He, deputy secretary general of the China Aquatic Products Processing & Marketing Association (CAPPMA), said the figures reflected seasonal patterns in consumption and supply.

Cui believes the “short period of supply,” especially for product from local fish farms, caused prices to grow 11.4 percent in March, compared to the 7.5 percent rise recorded in February. Cold weather, particularly in China’s northern regions, tightens supply in January and February, said Cui.

“Also remember only 30 percent of China’s [seafood] consumption is made up of [wild-caught fish], the rest of the supply comes from aquaculture,” he explained.

Seafood prices appear to mirror seasonal trends in other key food categories. Vegetable prices posted a 20.5 percent gain in March, though fresh fruit prices contracted by 6.2 percent. Meat and poultry prices increased 11.3 percent in March, continuing a monthly decline from a 33.6 percent rise in July 2011. Prices did, however, spike in January, by 18.7 percent, compared to a 16.6 percent rise in December, suggesting the effect of weather and Chinese New Year demand also driving up seafood prices.

“The supply crunch was particularly obvious in northern China in this period [January to March],” said Cui. He said he expects a dip in prices with the onset of warmer weather in April.

Seafood consumption is also seasonal. Cui explained that there’s usually a drop-off in April, prompting lower prices, and a pick-up in May, which brings a May Day holiday and more restaurant trade.

China’s government has made taming inflation within 4 percent a central priority of 2012 and has tamed credit growth accordingly, limiting liquidity from state-owned banks, for example. While seafood prices are likely to fall in April, Cui warns that rising input costs in 2012, particularly in the form of climbing oil prices, may keep prices high.

Other recent data has sparked concern that demand in China may be cooling. The General Administration of Customs released figures earlier this week that showed weakening exports and imports. While China recorded a surplus of USD 5.35 billion in March, compared to a deficit of USD 31.48 billion in February, its exports jumped 8.9 percent year-on-year in March to USD 165.6 billion, while imports were up 5.3 percent percent to USD 160.3 billion, compared to 39.6 percent growth in imports in the previous month.

This slower pace of growth worries Chinese policymakers as it reflects weaknesses in the local processing sector — a large portion of China’s import figures are made up of materials for processing plants for re-export.

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