China has raised both gasoline and diesel prices by 480 Yuan or some 70 U.S. dollars per ton from last week as crude costs increased. Experts say the adjustment is in line with changes to the international crude price and it would have a limited effect on the country's consumer price index. He Fei has the story.

Reporter:

After the price rise, the benchmark price of gasoline is now 7,100 Yuan or 1,040 US dollars a ton and diesel is about 930 dollars a ton.

The adjustment is China's eighth under a new fuel-pricing mechanism that took effect in January. Under this system, the country would consider changing the benchmark retail prices of oil products when the international crude price changes more than four percent over 22 straight working days.

Zhou Dadi, an energy researcher says this round of price adjustment is in line with the international crude price changes.

"In the past month, the average price of the international crude oil has increased more than ten percent. So we adjusted our prices. What's more, over 50 percent of China's oil consumption depends on imports. We cannot take measures such as a government's subsidy to cope with such price changes. So our price adjustment has just reflected the international changes."

Talking about sectors that might be impacted by the price change, Zhou says enterprises that consume a lot of oil or the ones in which oil weighs heavily on their operation costs, such as airline companies, public transportation and taxies, would surely see an operation costs rise.

The National Development and Reform Commission or NDRC, China's top economic planner, says on its website that the country would take active measures to help reduce pressure on those sectors.

NDRC says China's airlines will resume fuel surcharges on domestic flights after the price increase. Taxi drivers will be able to charge higher fare rates or add fuel surcharges to pass on the higher costs.

In addition, Zhou Dadi, the energy expert, says the price adjustment will not largely affect the country's consumer price index.

"The price adjustment would not impact the macro-economy. It would place a very limited impact on the consumer price index. At the same time, it reflected the price change of the international crude in a timely manner, so it would boost the economy to grow in a healthier way."

NDRC officials have estimated that this round of fuel price hikes would add 0.12 percentage points to the consumer price index this month. And because the CPI still runs at a comparatively low level, it would do no harm to the stability of the price level.

Zhou Dadi adds that among all the sectors that may be influenced by the oil price hike, oil refiners might be the only beneficiary.

"The move will improve the oil refiners' operation condition. Otherwise the government would subsidize billions of dollars to those enterprises, like it did last year. But now it's impossible for the government to subsidize so much money to a single industry."

Zhou Dadi predicts that in the remainder of this year, the international crude oil price might continue to fluctuate, but without big ups and downs.

For Biz China, this is He Fei.