China raised gasoline and diesel prices today by less than half of what crude oil has gained in the past month as the world’s fastest-growing major economy seeks to contain inflation. The price of gasoline will rise by as much as 4 percent to 310 yuan ($47) a metric ton and diesel by 300 yuan a ton, the National Development and Reform Commission said in a statement on its website yesterday, the third increase this year in the world’s second-largest oil consumer. Crude in New York has gained 9 percent since China last increased prices on Oct. 26. “This is a long-delayed move as the government is concerned about inflation while refiners are suffering losses after crude costs soared,” said He Wei, an oil analyst with BOCOM International Holdings Co. in Beijing. “We think the 4 percent increase is far from enough to offset crude gains.” Inflation in China accelerated to 5.1 percent last month from a year earlier, the biggest jump in 28 months, driven by higher food costs. Chinese consumers are more concerned about rising prices than at any time in the past decade, the People’s Bank of China said on Dec. 15 in its quarterly survey of 20,000 households across the country. The decision to increase gasoline, diesel and kerosene prices was taken after “careful consideration” in view of the rapid increase in overall prices in China, the NDRC said. The adjustment will add 0.07 percentage points to the monthly consumer price index, it said. Increase Delayed “Crude prices in international markets this month reached the highest since October 2008,” the commission said. “However, taking into consideration the trend of prices and supply of refined oil products, the government did delay the price increase and limited its scale,” the NDRC said in a question- and-answer posting on its website. The retail price of N90-grade gasoline will be allowed to increase by up to 0.23 yuan per liter and N0 diesel by as much as 0.26 yuan a liter, the commission said. The ex-factory cost of No. 3 jet fuel will rise by 300 yuan per ton to 5,990 yuan. China National Petroleum Corp. and China Petrochemical Corp., the nation’s biggest oil companies, and other refiners have been told to ensure prices aren’t increased by more than the ceiling set out by the government, the NDRC said. Local departments of the commission will step up monitoring of fuel prices and crack down on hoarding and price fixing, it said. Shares Gain China Petroleum & Chemical Corp., the listed unit of China Petrochemical, rose 2.4 percent, the biggest gain since Dec. 13, to close at HK$7.39 in Hong Kong. PetroChina Co., whose parent is China National Petroleum, gained 0.3 percent to HK$9.94. The government has made 13 adjustments since introducing a mechanism in December 2008 that allows the NDRC to revise fuel prices when crude costs change more than 4 percent over 22 working days. Futures in New York have risen 10 percent since Nov. 18 and were trading at $89.94 a barrel at 11:40 a.m. in Singapore. Higher fuel prices may prompt refineries to boost production to ease a domestic supply shortfall. Chinese state oil companies are increasing processing in a bid to ease diesel shortages in the south and east as demand from farmers and factories rises. --Winnie Zhu. Editors: Clyde Russell, John Viljoen. To contact the Bloomberg staff on this story: Winnie Zhu in Shanghai at wzhu4@bloomberg.net To contact the editor responsible for this story: Clyde Russell at crussell7@bloomberg.net

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