Rising pork prices, coupled with a declining domestic supply, could trigger high inflationary rates across China over the next year, claimed a report byReuters on Tuesday, with the nation's top economic planning agency now ordering producers to stockpile its frozen pork supply ahead of a possible supply squeeze.

Pork, the country's staple meat, traditionally dictates most of China's food price cycle, the report noted; and any increase in its price as such, would push up inflation in the country, it said.

"We expect pork supplies (in China) to decline by early next year if profitability remains depressed, resulting in higher prices which will fuel food inflation," told Jean-Yves Chow, a senior feed industry analyst at Rabobank in Hong Kong, to the news agency.

"We are seeing depressed margins leading to hog and sow liquidation among the small producers in various parts of the country...it poses real risk to supplies and prices going into early next year," he said.

As such, on August 7, China's National Development and Reform Commission (NDRC) said that it would increase state purchases of frozen pork from the domestic market in order to stabilize live hog prices and maintain profitability for pig farmers.

This came after Chinese hog producers were also forced to sell their herds after the U.S. drought led to a steep rise in corn and soybeans.

"If you look at corn and soymeal prices in China, the cost of feeding animals is already reaching a record," noted Chow.

Additionally, the Chinese are also hoping to avoid a repeat of 2007, when a deadly outbreak of blue ear disease saw China's pork production fall significantly, leading to higher food prices and domestic unrest.

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China is the world's largest producer of pork, responsible for over 50 million tonnes a year, or half of the world's supply. The nation also already holds large reserves of the meat, both in live animals and frozen form, to help stabilise domestic prices during extreme price fluctuations.

In an interview with Reuters however, Wang Xiaoyue, an analyst with Beijing Orient Agri-business Consultant, said that the impact of pork prices may be limited on the economy this time around, as compared to 2007, as demand for pork was weakening amid China's economic slowdown.

The overall economic situation is not sound," he said. "People dine less at restaurants and many plants have shut down, which is hurting pork demand."