Business Intelligence on Retailing, Franchising, and Consumerism in China

NDRC Takes Measures To Intervene On Goods Prices

To control the price increases in China, the National Development and Reform Commission says it will take temporary measures to limit the prices of goods like grain, oil, meat, eggs and milk.

Since May 2007, there has been a dramatic increases in prices in China. In the first half of January, the retail price of bean oil, pork, beef and mutton in 36 cities in China increased by 58%, 43%, 46% and 51%, respectively, compared with that of the same period of last year. Some companies are taking the opportunity to raise their prices and this has affected social stability.

As a result, NDRC has taken the temporary measures to limit the goods price according to China's Price Law which says that provisional measures can be taken when there is a dramatic rise in prices or possible increases of prices. The goods whose prices will be controlled this time are mainly those that are closely related to people's daily lives such as grain, edible oil, pork, beef, mutton, diary products and liquid gas.

During the price intervention period, operators' price increases must not be higher than the cost increase and the government can limit the manufacturers' profit rate and goods distribution difference rate. Operators must apply for a price increase to the local pricing department 10 days in advance of their expected increase.

NRDC says that adopting temporary price intervention does not affect enterprises' overall price making abilities, nor is it freezing prices. Instead, it is intervening on enterprises' unreasonable price adjustments. The measure will be cancelled after the price increase disappears.

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