'The association is informing all laundry shops to increase existing charges by 10 per cent to compensate for part of the upward adjustment of oil prices,' it said.

'The proposal is put forward with an objective understanding of the problems faced by the people in the industry. We hope the public and our customers can appreciate our difficulties so that we can continue to provide quality service.'

The association said rising oil prices had caused operating costs to increase dramatically since last year.

While many laundries use dry cleaning and pressing machines that run on oil, the union also cited fuel costs for delivery vehicles.

Oil was also used in the production of plastic products such as hangers and bags, the union pointed out.

Kong Lai-ping, general manager of the 32-branch Sunshine Laundry Convenience Store, said she supported the union's move and would increase charges by 5 per cent.

'The price for a barrel of oil has jumped from $420 to $600 since last October. I believe our customers will find a 5-per cent rise acceptable as we are only talking about a difference of about $1 for a normal transaction of $20,' she said.

Elaine Chan Siu-ping, senior sales manager of the 38-branch Clean Living, said she believed the announcement was an attempt to stop some laundries from offering their services at cutthroat prices.

Smaller firms showed more reluctance to impose a price rise on customers, saying it was difficult for them to compete with laundry chains.

The Economic Development and Labour Bureau said the union's move was against the principle of free competition under a government guideline issued last September.

'Increasing the cost for buyers through price-fixing and compromises in the industry constitutes anti-competition behaviour,' said a bureau spokesman.

The bureau pledged to follow up the issue with the laundry association and relevant government departments.

Leo Sin Yat-ming, a professor of marketing at Chinese University, warned that the move could contribute to an inflationary trend and slow down economic recovery.

'I believe 10 per cent is far too much,' he said.

'Other sectors, especially catering, would soon follow suit because oil plays such a big role in every aspect of our life.'

Pamela Chan Wong-shui, chief executive of the Consumer Council, urged the government to legislate against monopolies by big businesses and behaviour that discouraged free competition.

'What we are most concerned about is not whether the shops will increase their charges, but whether the association is in a position to fix the rate of increase for shops across the territory,' she said.