Gas price hikes fuel inflation fears

Recent hikes in the prices of gasoline and diesel have increased the likelihood of inflationary pressure on a number of service industries, including taxi fares and express deliveries, and the city is likely to see rises in the price of fresh food.

The retail prices of gasoline and diesel climbed by 0.44 yuan and 0.51 yuan per liter respectively starting Tuesday, with gasoline reaching 8.33 yuan ($1.32) per liter. The adjustment came after a rise in international crude oil prices, explained the National Development and Reform Commission (NDRC) in a statement.

In order to offset increased fuel expenses, the NDRC said Monday that people working in industries including agriculture, fisheries, forestry and public transport sectors will be given subsidies.

Taxi drivers, who are likely to be impacted heavily by the hikes, will be offered a temporary subsidy of about 300 yuan per month before an increase in taxi fares, said the NDRC, according to a report in the Beijing News yesterday.

The Beijing Municipal Commission of Development and Reform said at present, they are discussing whether to raise taxi fares directly or to issue temporary subsidies to drivers, the report said.

Zhong Dajun, director of the Beijing Dajun Institute for Economic Observation said that impacts on living costs caused by hikes in fuel prices will gradually appear.

If the government fails to offset the fuel expense by offering subsidies to cab drivers or public transport departments, they will have to increase fares, he said.

A taxi driver, surnamed Wang, yesterday said he heard that Beijing may increase taxi fares to 2.4 yuan per kilometer. The current fare of 2 yuan per kilometer has been in place since 2006, although last year a surcharge of 2 yuan was added to the fare for a journey of over three kilometers.

A resident surnamed Li said that he is worried that the hikes in fuel prices will make it even more difficult to hail a cab.

"Drivers might avoid traveling somewhere with no passengers, and prefer to stay in a certain spot to wait for fares," Li said, "They will also be more picky in choosing the passengers by their destinations."

Wang said the fuel hikes will affect drivers more who live in the suburbs, as they often have to drive an empty car to airports or to the city center to pick up passengers.

For drivers living in the downtown, the cost is likely to rise by 25 yuan per day.

"It's possible that the numbers of available taxis during peak hours will reduce," Wang said, "Drivers are reluctant to travel to badly congested areas."

It is not yet known if airline ticket prices will rise. A staff member from Air China yesterday said they had not received any information about additional fuel surcharges.

Other industries based on transportation, such as express delivery and fresh food are likely to see price hikes, said Zhang.

Shentong Express, one of the country's main express companies, is considering increasing prices by seven percent from May 1, according to a report by the Qilu Evening News in Shangdong Province.

Yesterday, employees from customer service departments from Shunfeng, Yuantong and Yunda delivery companies told the Global Times they had not received any notice to raise their prices.

However, a staff member at a Zhongtong Express delivery station in Changyang thought that express charges may not rise in Beijing, as many packages are delivered by electronic bicycle.

But fruit and vegetable dealers are planning to raise prices.

A fruit seller from a store on Guanghua Lu, Chaoyang district, yesterday said that while currently fruit prices have not changed, he expects a hike in prices within the next two weeks.

"Produce prices are not affected by gasoline prices now, as the products on sale were transported here before the hikes," said a member of staff from Xinfadi agricultural products wholesale market, in Fengtai district, according to the Beijing Evening News.

"When the new products come in a couple of days, we'll see the price changes," the market employee said.