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China's fuel price hike - the local impact

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Last Friday China's National Development and Reform Commission (国家发改委) announced an upward adjustment in the price of gasoline and other petroleum products including diesel fuel and jet fuel, effective immediately.

Gasoline and diesel prices will rise between 17 and 18 percent nationwide and jet fuel prices will jump by nearly 25 percent.

These substantial fuel price hikes are expected to have far-reaching impacts on consumers in Kunming and throughout China, where logistics costs account for around 20 percent of an item's price, compared to seven or eight percent in more developed countries. Last Thursday, the World Bank raised its projection for inflation in China this year from 4.6 to 7.0 percent.

Food prices are expected to feel upward pressure from rising fuel costs. Kunming daily Dushi Shibao spoke with industry players to find out the impact of the price hike on the cost of certain food items in Kunming. Here's what they found:

Food oils: A manager surnamed Chen at the Kunming subsidiary of Luhua Peanut Oil said the transport cost for a five-liter bottle of peanut oil has suddenly jumped from 5.0 to 7.5 yuan. Despite the increased transport costs, Chen said food oil retail costs should maintain current levels for the time being.

Pork: A general manager at a local meat products company said that transport costs only account for a small percentage in the total cost of pork production. Rising feed costs, he said could possibly lead to further increases in the price of pork.

Rice: Rice prices should be unaffected by the increase in fuel costs, as most of Kunming's rice is transported by rail or sea, with only short-distance distribution done by trucks.

Frozen dumplings and ice cream: A spokesperson for Chengdu Guofu Longfeng Food Products Co Ltd told Dushi Shibao that transport costs for frozen dumplings and ice cream made in Chengdu and sold in Kunming will go from a total of eight percent of the products' retail cost to between 10 and 12 percent.

In addition to varying affects upon food prices, the jump in fuel costs is also affecting how people are getting around the city – retail sales of electronic bicycles in Kunming were up 20 percent, according to the Dushi Shibao report.

Related articles:

Rice: The new oil?

Yunnan food prices increasing

Kunming hit by gasoline shortage

Kunming taxies now adding one-yuan fuel surcharge

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