In China, inflation eased as global consumer prices rose


CHENGDU, CHINA – Sichuan peppers ripen here in southwest China, with the spicy mint scent wafting from the scattered rows of trees.

But farmers are worried. Prices for capsules — which serve up chili peppers and other particularly spicy Chinese foods — have fallen sharply this year, as coronavirus shutdowns and the resulting economic cold kept home-goers squeezing pennies.

“It’s hard to sell this year,” said Liu Cuihua, 71, who used scissors to cut clusters of green pods from the thorny stems. “The prices are very low.”

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From Sichuan peppercorns to cotton to housing, the concern this year in China is lower prices. It’s a stark difference from the West, where consumers are dealing with mouth-watering inflation.

“In the United States, you have people who have a lot of money to spend and not enough things to buy,” said Jacob Gunther, a senior analyst at the Mercator Institute for China Studies. “In China, you have the opposite problem. The demand has been in landfills.”

Consumer prices in China grew 2.5 percent in June from a year earlier, the highest level in two years, but still far behind the United States, where inflation exceeded 9 percent, and the eurozone, where it exceeded 8 percent. Economists say “core” inflation in China is lower, with prices of many everyday goods stable or declining. The difference illustrates how the world’s second-largest economy has drifted away from the West in the wake of the trade war and China’s closing of its borders in the pandemic.

Szechuan peppercorns, or “huajiao” in Chinese, are used in home cooking, but they appear in exorbitant quantities in restaurant dishes, where they are applied with a fist for their festive appearance and tongue-in-cheek taste. They are often used in more expensive meat dishes and hot pot feasts, rather than in Vegetarian meals are cheaper, which makes it a small measure of Chinese consumer sentiment.

Shoppers had to skimp on more than just a few spices.

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China’s “zero Covid” policy has largely allowed the country to avoid the death tolls seen elsewhere, but at a painful economic cost. Closures have repeatedly halted factory production and transportation, halting delivery of sofas, cars and many other items to consumers overseas. Within China, restrictions have left many unemployed or underemployed, and prompted consumers to tighten their belts.

“This trend is likely to continue,” said Zhiguo He, a professor of business administration at the University of Chicago, describing coronavirus controls as “extremely draconian.” New coronavirus cases in Shanghai in recent days have raised the specter of a wider lockdown in the country’s most populous city.

Beijing has refused to follow the US’s lead in providing broad-based incentives directly to consumers, which helped the US economy recover but accelerated inflation. There has been official support for some sectors in China, such as housing, but housing prices are still falling for 10 months.

In Chengdu, taxi driver Yu Chibin, 48, says he’s noticed a slight rise in pork prices, but his living costs are otherwise stable. While gas prices in China have risen, Beijing’s decision to continue buying oil from Russia means that prices at the pump have not risen as much as in the West.

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But Yu says his taxi fares have fallen a lot this year, as restrictions imposed by the outbreak continue to hamper tourism. Visitors to Chengdu from high-risk areas face a week of quarantine even if they test negative for the coronavirus.

“I didn’t have much business,” he said.

The Biden administration is considering whether to raise some tariffs under Trump on Chinese goods, which could help ease inflation in the United States and provide a little boost to the Chinese economy. Even if these tariffs are lifted, some trade restrictions will remain in place, notably the recent US ban on the majority of China’s cotton supply, due to the risk of forced labor in Xinjiang.

“You hardly earn anything.”

Liu, the farmer, says she has not seen the kind of price inflation that has wreaked havoc on consumers’ wallets in other countries. What she has seen is that her income is shrinking, with pepper prices in Sichuan dropping to about 90 cents a kilogram this year from about double what they were last year.

One afternoon, Liu sat at his home in Dongsheng Village, south of Chengdu, the capital of Sichuan Province, cutting seed pods from stems, which were covered with thorns as large as a rose. Then she spread it out on a piece of cloth on the floor, out of direct sunlight, and directed an electric fan to it to speed up the drying process.

“All this work and you hardly earn anything,” she said.

This early crop of green pods can be used fresh in cooking, or to make an oil infused used to add zing to stir-fries and other dishes. But local media reported that pepper oil factories in Sichuan reduced their orders for the spice this year, as they expected fewer purchases by consumers.

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In early autumn, the ripe seed pods will be collected and dried, getting rid of the black seeds inside and retaining the aromatic peel. These will make their way into restaurants across the country, and into factories where they are used to make other foods.

Sichuan residents say the recent price drop is partly due to sellers trying to empty stores last year as the new harvest season arrived. At the Spice Wholesale Market in Chengdu’s Five Rocks last week, vendors sat stacking piles of Sichuan peppers from last year’s harvest in various shades of red, brown and green. There were few buyers. Asked how the business was going, several vendors, who declined to be named, said sales had been slow due to the pandemic’s impact on restaurants.

On a Saturday evening in Chengdu, Wang Dong, manager of the 1802 Mingzhuanghui Restaurant, whipped up thick slices of fish from a spiced broth swaying with Sichuan peppercorns on guests’ plates. They were having a dinner to thank loyal customers and promote their wine business.

“The entire restaurant industry has been affected by the epidemic,” Wang said.

He said ingredient prices have been largely stable this year, despite spikes in the costs of seafood moved from the coast during periodic shutdowns. However, Wang added that the idea of ​​raising menu prices had not crossed his mind.

“Restaurants that raise their prices are liable to stop working,” he said.

In Dongsheng Village, Fu Dili, who has been growing Sichuan pepper for more than a decade, lamented the poor market for his products.

“Things have gone really well until this year,” he said.

Lyric Lee from Seoul contributed to this report.

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