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China Views
June 20, 2008

 

China adjusted refined oil and electricity prices, limited impacts on CPI inflation
The National Development and Reform Commission (NDRC) announced a series of adjustments to energy-related prices on June 19 (see Exhibit 1). Effective from June 20, benchmark gasoline and diesel prices will be both hiked by Rmb1000 per ton (16%). Retailers will be allowed to raise prices further by up to 8%, which we believe will most likely be utilized. Therefore, retail gasoline prices can potentially be raised by 26%. Jet fuel prices were hiked by Rmb1500 per ton (25%).
Electricity prices will be hiked by 2.5 cents per kwh (4.7%) on average. However, electricity prices for households and agricultural production, natural gas and LGP prices will not be adjusted. At the same time, the NDRC announced that it will cap power coal prices at its level on June 19 until the end of 2008.