China raises petrol and diesel prices

AFP, Tuesday 21 Dec 2010

Fuel prices rise for a third time this year as inflation increases for fastest rate in 2 years

China will raise petrol and diesel prices from Wednesday by 310 yuan (46.6 dollars) a tonne and 300 yuan a tonne, respectively, Xinhua news agency reported.

The retail price of petrol will rise 0.23 yuan a litre (13 cents a US gallon) while diesel will climb 0.26 yuan a litre, it said Tuesday, quoting the National Development and Reform Commission, China's top economic planning body.

The increases are the third this year, following hikes in October and April and are likely to further fuel domestic inflation, which surged to 5.1 per cent in November, the fastest increase in more than two years and above Beijing's full-year target of 3 per cent.

China, the world's second-largest oil consumer, has maintained a tight grip on fuel pricing to keep inflation in check. A more market-oriented pricing mechanism introduced in late 2008 calls for changes in domestic fuel prices when the 22-day moving average of a basket of international crude oils rises or falls at least four percent.

Crude oil prices hit a two-year peak on Tuesday, boosted by volatile thin trade, the weak dollar and freezing weather in Europe and the United States.

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