No China fine for Unilever over price hike: report

BEIJING: Authorities in China will not punish Unilever for raising prices of some household items, state media said Friday, just weeks after the consumer goods firm was fined for announcing planned price hikes.

"Companies like Unilever have the right to decide whether to raise prices or not, it's their decision. We will not interfere," the China Daily quoted Li Qing, an official with the National Development and Reform Commission, saying.

But controlling prices of daily necessities remains a pressing task this year for the NDRC, the country's top economic planning agency, she said, according to the report.

Chinese media said this week retailers in major cities including Beijing, Shanghai and Guangzhou received notice from Unilever that prices for products such as shampoo and body wash would increase by around 10 percent.

On May 6, the NDRC slapped a two-million-yuan ($308,000) fine on the Anglo-Dutch firm after concluding the company "illegally disseminated news of price hikes" and sparked the panic-buying of shampoo and detergents in March.

The fine was seen as a warning to other companies and highlights the growing anxiety in Beijing about soaring costs.

The country's consumer inflation, which has a history of triggering social unrest, remained stubbornly high at 5.3 percent in April after hitting 5.4 percent in March, the highest level since July 2008.

The central bank has responded to growing price pressures by raising interest rates four times since October and repeatedly increasing the amount of money banks must keep in reserve -- effectively cutting their lending power.

Authorities have also intervened directly in the market, warning a number of companies not to raise prices as authorities crack down on hoarding and offer subsidies to the poor.

However, some food and consumer goods makers have sought to tip-toe around official controls by reducing the size of their products while keeping prices unchanged, according to Chinese media reports.

Copyright AFP (Agence France-Presse), 2011