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China Raises Oil Prices Further As Inflation Eases

The Chinese government on Monday raised fuel prices for the second time this year after crude oil prices surged, reports said citing data from the National Development and Reform Commission (NDRC) showed.

The increase was the biggest since June 2009 when gas and diesel prices were raised by 600 yuan per tonne, the official news agency Xinhua said. The latest hike came after crude prices climbed more than 10 percent in the international market since early February.

After the increase, gasoline will be costlier by 0.44 yuan per liter in the Chinese retail market, while the price of diesel will be higher by 0.51 yuan per liter. Gasoline price will rise by 7 percent per tonne and diesel price by 7.8 percent.

The latest oil price hike comes as China's annual inflation eased sharply to a 20-month low of 3.2 percent February from 4.5 percent in January.

The Chinese government also announced that it would offer oil price subsidies for sectors such as agriculture, fisheries, forestry and public transport sectors including taxi drives, as they are likely to be hit the most by the hikes.

China, the second largest consumer of oil after the United states, is highly dependent on imports to meet its increasing fuel demand at home. The country's reliance on oil imports rose to 56 percent last year from 30 percent in 2000.

The NDRC is allowed to adjust retail prices of gasoline and diesel when global crude prices change by more than 4 percent over 22 working days, under an oil pricing mechanism adopted at the start of 2009.

by RTTNews Staff Writer

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