Tuesday, April 26, 2011

China: Vegetable Prices Slumped Despite High Headline Inflation

Despite consistently high inflation, particularly in food prices, which rose 11.7% in March over a year ago, there?s one thing that its price is dropping bizarrely.

According to China Daily, vegetable prices in various regions slumped after good harvest.  The prices decline has hurt some of the farmers, as they found themselves having inventories of vegetables and falling prices, and those who previously hoarded their harvest were hit hard.  So oddly enough, while the government is busy fighting inflation in other parts of the economy, the ministries are now trying to stabilise the vegetable market because some farmers commit suicide:

China’s ministries of commerce and agriculture have moved to stabilize the vegetable market after plunging prices reportedly forced a farmer in East China’s Shandong province to commit suicide and left many others with losses in other areas.

Price drops for vegetables have occurred in many areas of China recently, including the national capital of Beijing, as well as Shaanxi, Zhejiang, Fujian and Henan provinces. This development has surprised many farmers, including Yan Baofu from eastern China’s Shandong province.

"Everything I grew this year ended up with a sheer loss. Prices of tomatoes, cucumbers and peppers keep going down, not to mention celery and green onions. They’re better off rotting on the farm," Yan says.

According to data from the Ministry of Commerce (MOC), the average prices for 18 types of vegetables plunged 9.8 per cent between April 11-17 than the previous week.

However, the slump in vegetable prices are more localised in some regions in China, and the drop might not be felt by the end consumer.  Also, as prices other food items are still high, there is little hope that the slump in vegetable prices will help bringing down the overall inflation.

This article originally appeared here: China: Vegetable Prices Slumped Despite High Headline Inflation
Also sprach Analyst - World & China Economy, Global Finance, Real Estate

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