Darn Them Piggies! Pork Prices & the Inflation Outlook for China

It was pretty clear to me on a recent visit that China has become one of the biggest global markets for Angry Birds. The game was everywhere and around 100 million Chinese downloads are expected this year. It made me wonder if this was somehow linked to rising concerns over inflation and a way of getting back at those (increasingly expensive) mischievous green pigs. During the past year, views on China’s economy have yo-yoed from concerns about the recovery, to hand-wringing about inflation and overheating, and then back to talk of hard landing. Inflation peaked in July and was all set to quickly retreat in the latter part of this year. Unfortunately, just as China appeared to be heading out of the (inflationary) woods, pork happened. An ongoing (and literal) hog cycle caused pork prices to skyrocket. While the hog-cycle will soon turn and the effects should wash out reasonably quickly, the bad news is that the return to more normal times and lower inflation will be postponed once again.