Soaring gasoline prices make drivers reconsider

Although oil price hikes have had only a minor effect on CPI growth as fuel only plays a small part in the calculation, the pass-on effect, which would affect the key logistics and transportation sector, should not be ignored, said Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University.

He said the impact, in the short term, will be minor, because of the government subsidy given to the public transportation sectors.

But in the longer term, Lin said, the "butterfly effect" of the gasoline price rise will be more visible, reflected by an increase in prices of agricultural products, rising transportation costs and more expensive fertilizer.  

Yuan Gangming, a researcher with Tsinghua University, was quoted as saying by the website China.com.cn that the oil price rise had a mildly negative impact on the CPI in March.

He attributes the price of agricultural products as key to the change in the CPI. But Yuan said the price hike is a burden on people's daily lives and suggested the government should take actions to ease concerns.

The fuel price increase has had a minor effect on the wholesale cost of vegetables but more on other forms of retail, experts said. Wang Jianmao, professor of economics at China Europe International Business School, told Neteast that he was not surprised by the result, saying the surge in the cost of labor and raw materials - particularly caused by the rise of fuel prices - led to the increase in the CPI.

He said the growth of fuel prices, such as diesel, will push up the price of agricultural products if most vehicles transporting agricultural products use diesel.

But Liu Tong, spokesman for Xinfadi, the largest agricultural wholesale market in Beijing, was reluctant to blame the hike in fuel price to the increase in vegetable prices. Most of the vegetables and fruit brought to Beijing is transported from Shandong province by vehicles that run on diesel. The transportation fees per vehicle remained at 3,000 yuan after the government raised the price of diesel, Liu said.

He added the driver has to cover the increase of 102 yuan for each 30 tons of vegetables per vehicle after the price for fuel rose. However, "the rise in the cost in transportation is not reflected in the wholesale price", he said.

wangzhuoqiong@chinadaily.com.cn