December 02, 2008

China facing pressure to raise fuel and electricity prices

According to Financial and Economic Affairs Committee of the National People's Congress, China is under strong pressure to raise fuel and electricity prices.

It said last month's price increases of 16% for gasoline and 18% for diesel will add 0.5 percentage point to annual consumer inflation.

The committee said after the price hike, domestic fuel prices are equivalent to about USD 90 a barrel in crude oil costs, though international crude prices of late have hovered around USD 140 per barrel. It said the latest electricity price increase is also far from sufficient to end losses of power producers due to rising coal prices, which are market oriented.

China hiked electricity prices by 4.7% effective July 1st 2008.