Fuel price drop hardly reduces living cost

GUANGZHOU -- Economic experts said China's latest fuel price cut won't have a significant impact on living costs, adding that prices may rebound during the next readjustment.

The price cut, starting from Wednesday, will lower the consumer price index for July by 0.01 percentage point, said Chen Qing, an analyst with the Beijing-based SCI, a major portal for Chinese commodity information.

"However, that doesn't necessarily mean that the cost of living will be significantly lowered," Chen said.

China's top economic planning agency, the National Development and Reform Commission, announced Tuesday that the benchmark retail price for gasoline would be slashed by 420 yuan ($66.5) per metric ton starting Wednesday, with diesel being cut by 400 yuan per ton.

The move marked the third cut in two months, as crude oil costs have continued to fall since China's last fuel price cuts in June.

For those who only drive their cars to work and consume less fuel, the benefits from the price cuts will be trivial, Chen said.

Price drops that are passed on to commodities such as vegetables as a result of lower transportation costs will be negligible, Chen said.

Chen said international crude oil prices may see another rebound as a result of greater global liquidity.

Prices for China's refined oil might also go up during the next readjustment, as a large number of construction projects will begin in the third quarter of the year and China's property market is warming up again, Chen said.