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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