Inflation worsens as China lifts petrol prices

The National Development and Reform Commission (NDRC) announced the decision, declaring: Due to the sharp spike in international oil prices, some refineries had to be shut down, with queues at petrol stations and rationing re-emerging in some regions. Appropriate increases in fuel prices will help raise supply and promote energy conservation.

Beijing lifted the retail price of petrol by 16.7 percent to 6,980 yuan ($US1,015) a tonne and diesel by 18.1 percent to 6,520 yuan a tonne. The retail price for electricity was raised by an average of 4.7 percent, except in areas hit by the May 12 earthquake and in the impoverished Central Asian province of Xinjiang.

Like most developing Asian countries, China maintains domestic caps on energy prices that are substantially lower than international benchmarks. As a result, the state-owned petroleum corporations and refiners such as PetroChina and Sinopec have incurred huge financial losses, forcing them to scale back or even halt production and imports. Some smaller refiners have gone bankrupt. China had to increase fuel prices by 9-10 percent in November for the same reason.