(Bloomberg) -- China’s policymakers may be doing their utmost to shake off deflationary pressures weighing on much of Asia’s largest economy, but there’s one category of products that stands out as a contrast: vegetables.
The prices of fresh produce from cabbages to cucumbers — items integral to the diets of millions across the country — have surged on a combination of disruptive weather and roiled logistics. Among the recent challenges was the hit from Typhoon Bebinca, the strongest storm in more than seven decades to strike Shanghai and the neighboring Yangtze River Delta region.
While rising vegetable costs may buoy an otherwise pressured consumer price index, they run the risk of restraining household spending on other items, and acting as a brake on China’s recovery. In the latest sign of the authorities’ resolve to inject fresh momentum into the economy and revive confidence, Beijing announced wide-ranging stimulus measures earlier this week.
Against that mixed backdrop, the surge in vegetable prices has been marked, with recent gains taking prices far above seasonal norms. At the wholesale level, a kilo of vegetables has surged to more than 6 yuan (85 cents) as of Sept. 20, up from 4.24 yuan in mid-June, and the highest price for that time of year since at least 2018, according to commerce ministry data.
Agriculture ministry figures paint a similar picture, with the average wholesale price of 19 vegetables up by more than a third from a year ago. Among individual items, green peppers are now twice as expensive, and a kilogram of spinach is close to parity with the same weight of eggs, which are usually more costly.
The surge in prices has been underpinned by extreme weather roiling farming regions, with periods that have been too hot as well as too wet.
In Shandong province, a major grower, heat and rains at the end of last month delayed produce from arriving at markets, according to “Chinese Vegetables”, a magazine run by the Institute of Vegetables and Flowers.
Elsewhere, heavy winds and rains battered plots across Jiangsu and Zhejiang provinces, and around Shanghai, while some important vegetable-producing regions in the north were affected by flooding of some low-lying fields, the magazine reported.
Looking ahead, more bad weather — and further challenges for vegetable producers — may be in store. As much as 250 millimeters (9.8 inches) of precipitation is expected to hit parts of southern China in the coming week, according to a forecast from the national weather bureau.
On the Wire
China’s central bank lowered the interest rate charged on its one-year policy loans while withdrawing liquidity via the lending facility, as the monetary authority shifts toward a short-term tool in an overhaul of its policy framework.
A US-led coalition of countries is looking at funding more minerals projects using a financing network aimed at combating China’s dominance of metal supply chains.
The yuan rallied past the 7 per dollar milestone for the first time in 16 months as investors digested a raft of measures to support the Chinese economy and the recent Federal Reserve rate cut kept the dollar on the back-foot.
This Week’s Diary
Wednesday, Sept. 25:
- CCTD’s weekly online briefing on Chinese coal, 3pm local time
- China’ new quality standards on some steel products effective from Wednesday
Thursday, Sept. 26:
- China Minmetals Industry Finance Forum starts in Shanghai and runs through Friday
Friday, Sept. 27:
- China weekly iron ore port stockpiles
- Shanghai exchange weekly commodities inventories, ~3:30 p.m. local time
- China industrial profits for August, 9:30am local time
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