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Egg prices jump in August, raising inflation concerns

By Chen Yang (Global Times)

09:04, August 13, 2012

The prices of eggs and edible oil have risen sharply in August, fueling inflationary concerns after the consumer price index (CPI) hit a 30-month low in July.

The average wholesale price of eggs rose by 7.3 percent Saturday from July 21, data compiled by the Xinhua News Agency showed.

Egg prices climbed sharply from May to a record high on June 11, and then started to drop. Prices began to rebound again in late July, according to the report.

The main reasons behind the recent price hikes are decreasing egg output due to weather factors, rising cost of feed stuffs and increasing egg purchase from moon cake makers ahead of the Mid-Autumn Festival in September, Guo Liye, an agriculture analyst at the Distribution Productivity Promotion Center of China Commerce, said in a research note sent to the Global Times.

Guo expects egg prices to reach as high as 9.8 yuan ($1.5) a kilogram by the end of September, which could help poultry farmers reverse profit drops.

But he noted that the price hike will have a limited effect on inflation because of relatively small weighting of egg prices in the CPI.

Another consumer product that has shot up in price is edible oil.

Peanut oil rose by 12.3 percent Friday from April 1, data from Xinhua showed.

"Peanut oil only accounts for about 10 percent of daily oil consumption, so a hike in its price is not likely to push up inflation," Guo Qingbao, an industry researcher at Zhengzhou-based oil industry website, told the Global Times.

"But we expect prices of soybean oil and rapeseed oil to rise further. This could result in more severe inflationary pressures," Guo Qingbao said.

China's annual consumer inflation eased to 1.8 percent in July, the slowest growth rate since February 2010, according to the National Bureau of Statistics.

Some analysts expect the CPI growth would bottom out in August.

The inflation is expected to stay at 1.9 percent and 2.5 percent respectively in the third and fourth quarters, given the price rise in agricultural products and gasoline, China Merchants Securities said in a research note e-mailed to the Global Times Friday.

The National Development and Reform Commission said last week that local authorities offered temporary price subsidies to low-income groups in Guangdong and Shandong provinces and Tianjin in the second quarter, as the prices of some daily necessities were still high despite a drop in the CPI growth.

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