BEIJING: China will cut retail ceiling prices for gasoline and diesel by about 3 percent from Sunday, the first price cut this year, taking prices off record highs at a time when headline inflation eased from three-year highs.
Citing the National Development & Reform Commission (NDRC), the country's macro policy maker, official news agency Xinhua said the price cut would be 300 yuan per ($47) per tonne, confirming an earlier industry report.
China sets its retail fuel prices by tracking the prices of a basket of international crude over a 22-working-day cycle. A price change is usually triggered when global oil prices move beyond a 4-percent range during this period.
According to C1 Energy, which closely tracks the basket of crudes -- Dubai, Brent and Cinta -- global oil had fallen 4.09 percent during the 22-day cycle by October 7.
China last changed prices on April 7, with a hike of around 5 percent, which brought prices to record levels.
The price cut, announced the first day government offices returned from a seven-day national holiday, came after China's inflation pulled back to 6.2 percent in August from a three-year high of 6.5 percent in July and is widely expected to cool steadily for the rest of the year.
The modest price cut may help lift fuel demand in the world's second-largest oil user, which appears on track to deliver annual growth of around 6 percent this year.
The International Energy Agency last month pegged China's oil demand growth at 527,000 barrels per day this year, contributing more than half of the world's incremental demand.
Copyright Reuters, 2011