By Jiahui Huang and Fabiana Negrin Ochoa
China has capped a sharp rise in domestic fuel prices as governments across the region look to cushion consumers and business against energy-driven inflation stemming from the fallout of war in the Middle East.
Chinese authorities said Tuesday that under the country's biweekly pricing mechanism, gasoline and diesel prices should have risen by 800 yuan and 770 yuan a ton, respectively. Instead, they will go up by 420 yuan and 400 yuan apiece. The changes take effect at midnight.
Since the last adjustment on March 23, international crude prices have fluctuated significantly, and the government will continue to implement control measures to shield the domestic market from the impact, the National Development and Reform Commission said in the statement.
The move comes as markets brace for China's first full inflation print since the war began in late February.
A Wall Street Journal poll projects that Friday's release will show that consumer price growth held at 1.3% on the year last month, as producer prices finally swung back into the green after more than three years in negative territory.
After a long period of deflationary pressure, a bump in price growth could seem welcome on paper, but analysts warn that if demand remains weak, supply-side inflation will become a headwind.
For now, China looks better-placed than most of Asia to weather the storm as it can insulate from the price shock thanks to factors like sizable strategic oil reserves and the ability to lean on coal or renewable energy capacity.
Other governments in Asia have been rolling out a slew of stop-gap measures to shield consumers and businesses against an energy-driven inflation shock, with many announcing price caps and subsidies.
The longer the conflict lasts, the more difficult it will be to keep those buffers in place, raising the risk of slower growth and higher inflation across the region.
Write to Jiahui Huang at jiahui.huang@wsj.com and Fabiana Negrin Ochoa at fabiana.negrinochoa@wsj.com
(END) Dow Jones Newswires
04-07-26 0412ET
