China will lower domestic fuel prices in a move that will pass on the steep fall in crude prices to the pockets of Chinese consumers and assist the central government in keeping inflation in check, a key government agency said.
China
will
lower domestic fuel prices in a move that will pass on the steep fall in crude
prices to the pockets of Chinese consumers and assist the central government in
keeping inflation in check, a key government agency said.
China
will
cut gasoline prices by CNY230 a metric ton and diesel prices CNY220/ton
effective Tuesday, after sovereign debt woes in
Greece
and
potential problems in several other European Union countries sent crude prices
plunging, the National Development and Reform Commission confirmed Monday.
The changes represent cuts of around 2.8% and 2.9% below current average
gasoline and diesel retail ceiling benchmarks of CNY8,220 and CNY7,480/ton,
according to Dow Jones Newswires calculations.
China
will
also cut the benchmark ex-factory price of No.3 jet kerosene by CNY220/ton to
CNY5,470/ton from Tuesday, it said.
Under
China
's
domestic fuel price mechanism, fuel prices may be adjusted when the moving
average of a basket of international crudes changes more than 4% over a period
of 22 working days.
At 1030 GMT Monday, light, sweet Nymex crude for July delivery was trading
around $74.45 a barrel, down around 17% from a high of $89.77 a barrel on May
3, despite a recovery from lows under $69 a barrel early last week.
The price cuts should assuage some concerns that
Beijing
will
have difficulty achieving its goal of limiting the consumer price rise to 3% or
less this year.
"Lower oil product prices could take some heat off the inflationary
pressures
Beijing
is facing
from higher food prices," Qiu Xiaofeng, an analyst with China Merchants
Securities, said recently.
Yao Jingyuan, chief economist of
China
's
National Bureau of Statistics, Friday warned that the CPI target "can be
achieved, but with difficulty."
The CPI,
China
's key
inflation gauge, rose 2.8% from a year earlier in April and is likely to rise
around 2.5% in the first half of this year.
The nation last raised both gasoline and diesel prices by CNY320 a ton in
mid-April.
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