China CPI Down 1pc in 3 Months on Falling Pork Prices, Coal Ban Drives PPI

China's CPI was higher in 2019 and into 2020 because pork prices were soaring, a result of the Asian Swine Flu killing China's swine herds. Supply was increased and now pork prices are tumbling, down 16.2 percent this year and down 11 percent in May alone. One could say the inflation in pork was transitory...in contrast the PPI is running at a 17.8 percent annualized rate.

Similarly though, if you dig into the PPI you will see coal is a major driver of price increases in China. Why are coal prices soaring?

SCMP: China weighs price caps on coal as supply shortage sends energy prices soaring

Chinese authorities may intervene to control surging energy costs by capping the price of thermal coal as a ban on imports from Australia and rising electricity demand during an unseasonably hot start to summer wreak havoc in the power market.

News.com.au:: Almost two dozen Chinese cities forced to ration electricity after Australian coal ban

Two dozen cities across China’s industrial heartland are rationing electricity.

Homes and businesses are having to cope with shutdowns and extreme heat.

And politically-motivated bans on Australian coal are to blame.

What is more responsible for higher prices: money printing or policy failures? As long as both continue, it doesn't matter, but it matters a great deal if governments wise up or, as in China, credit growth starts declining.