The central bank raised interest rates yesterday to combat rising inflation, which has mainly been caused by rising food prices. Various economists have said it’s nothing to worry about, because it’s supply-side inflation and there’s nothing a central bank can do about it.

But there is one other factor driving this pork price rise that is worrying, and that’s the mysterious blue-ear disease that’s killed tens of thousands of hogs since last year. A few days ago, China’s top veterinary official came out to pooh-pooh rumors that millions of hogs had already died of the disease. Businessweek did a story recently about that, and so did the New York Times.

Top vet says pig disease is under control

Businessweek: Economics of the pork biz

New York Times: Virus spreading alarm and pig disease in China

Most people know about Muhammad Yunus’ Grameen Bank, what with him being a Nobel Peace Prize winner and all. But there’s also an organization called Grameen Foundation, which, although it has no legal ties to Yunus’ bank, nevertheless follows his principles. It’s not a source of capital; it’s more of a lubricator for capital and expertise to flow from people who have it to people who don’t have it but need it.

The EU Chamber of Commerce in Shanghai arranged for a presentation by Grameen Foundation’s East and Southeast Asia Regional Coordinator, Kate Druschel, about its activities in China. I wrote about China’s nascent venture philanthropy scene for this month’s magazine, so I was particularly interested to hear that Grameen Foundation would be ramping up its activities here.

As usual, we give you the highlights:

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Pork has been in the news this week, contributing as it has to rising headline inflation here. The latest inflation figures, for May, were released two days ago by the National Bureau of Statistics, showing the highest inflation rate on the mainland in more than two years — 3.4%.

Meat prices contributed significantly to that rise, as they increased 27% year-on-year, as did poultry, which increased 37% in the same period.

The meat increase was mainly due to more expensive pork, caused by an outbreak of “blue-ear” disease in southern China that claimed 18,000 swine lives since the start of the year, and up to a million more since last year, if unofficial estimates are to be believed.

The numbers certainly look daunting, but how serious is all this, really? According to a number of economists, it’s nothing to get too alarmed about.

Here’s what Jun Ma, Greater China economist for Deutsche Bank, had to say in a recent research note mailed to the media:

This May CPI inflation is close to the latest consensus estimate of 3.3% (such consensus estimates tend to converge to the actual figure in the few days before the official release), but significantly lower than the market feared 2-3 weeks ago about its possible overshooting to 4% or above. In this sense, this figure helps ease some pressure for immediate rate hike.

The key to this sanguine response is that core inflation has remained relatively stable over the years. Jonathan Anderson at UBS remarked in a research note in January (titled “No inflation scare just yet”) core inflation did not exceed 1% year-on-year for the past five years. He also noted that historically, the central bank has paid little heed to headline inflation figures.

the PBC (People’s Bank of China) has historically been very slow to raise lending or deposit rates if core inflation is not moving. The last time we saw strong CPI inflation, it wasn’t until the headline figure reached 5.5% in the fall of 2004 that the authorities raised rates - and then only by a minimal 27 basis points. And this was during a period of sharp macroeconomic tightening to boot.

So there you have it, no need to start that bacon and pork chop stockpile just yet.