Bloomberg News

China Said to Retain Cooking-Oil Price Caps as Inflation Gains

July 19, 2011

July 20 (Bloomberg) -- China, the world’s biggest consumer of vegetable oils, is maintaining caps on prices and hasn’t announced plans to sell from state stockpiles, according to two people briefed on the government’s policy.

The government controls prices through private accords with suppliers, said the people, who declined to be identified because they aren’t authorized to speak to the media. The caps have been removed, the Quanzhou Evening News reported July 17, citing an unidentified government official. A call to the newspaper seeking comment yesterday wasn’t immediately returned.

“The government clearly has no intention to loosen its grip on the market,” said Tommy Xiao, an analyst at Shanghai JC Intelligence Co.

Inflation in China has breached the government’s 4 percent ceiling every month this year, with consumer prices rising 6.4 percent in June from a year earlier, the fastest pace in three years. The central bank raised interest rates five times since October to stem the gains.

Wilmar International Ltd., which has about half China’s retail cooking-oil market, isn’t aware of a lifting of the caps, a spokesman for the Singapore-based company said July 18. He declined to be identified by name, citing company policy.

The government offered the biggest refiners soybeans and vegetable oils from state stockpiles at discounted prices earlier this year to compensate for the caps.

Li Pumin, deputy secretary general of the National Development and Reform Commission in Beijing, didn’t answer a call to his office seeking comment. The NDRC is the nation’s top economic planner.

--William Bi, Editors: Richard Dobson, Stuart Wallace

To contact Bloomberg News staff for this story: William Bi in Shanghai at rdobson4@bloomberg.net

To contact the editor responsible for this story: Richard Dobson at rdobson4@bloomberg.net


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