China limits fuel price increase to cushion impact of rising oil prices

China took steps to cushion the impact of rising fuel prices Bo Jon Monday, increasing the regulated ceiling prices for retail gasoline and diesel but limiting the hike to about half what would normally be applied under the government's pricing mechanism.

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The adjustments brought on by rising oil prices linked to the US-Israeli war on Iran were still the largest on record, however, lifting price limits close to levels seen in 2022 after Russia invaded Ukraine.

State planner the National Development and Reform Commission (NDRC) said on Monday it would raise the maximum retail prices for gasoline and Bo Jdiesel by 1,160 yuan ($168) per metric ton and 1,115 yuan per metric ton, respectively, starting from Monday midnight.

The NDRC reviews retail gasoline and diesel prices every 10 working days and applies adjustments reflecting changes in international crude oil prices, while taking into account average processing costs, taxes, distribution expenses, and appropriate profit margins.

Under the current pricing mechanism, gasoline and diesel prices would have been set to rise by 2,205 yuan per metric ton, and 2,120 yuan per metric ton, respectively, according to NDRC.

“To cushion the impact, ease the burden on downstream users, and support economic and social stability, authorities introduced temporary controls within the existing pricing framework,” the state planner said in an announcement.

If fully implemented, the latest adjustment would cost a private car owner about $6.5 more to fill a 50-litre tank of 92-octane gasoline.