Beijing to investigate price gouging after rumours spark panic buying

PUBLISHED : Wednesday, 30 March, 2011, 12:00am
UPDATED : Wednesday, 30 March, 2011, 12:00am

In a further bid to contain inflation, the mainland's top planning agency has launched an investigation into several companies that allegedly raised prices to exploit consumers, state media reported.

The National Development and Reform Commission (NDRC) said it had called executives at the companies concerned and told them the government would not tolerate any unreasonable price rises.

It would not tolerate any price collusion among companies or any acts aimed at pushing up prices, China Radio reported on its website, citing an unnamed planning official.

The move came a few days after rumours that the companies would raise prices at the beginning of next month caused panic buying in Shanghai and to a lesser extent in Beijing and other mainland cities.

State media began reporting late last week that the four consumer-goods companies that dominate the market for detergents - Unilever, Procter and Gamble, Guangzhou Liby Enterprise Group and Nice Group - were expected to increase prices by 5 per cent to 15 per cent next month.

Taiwanese instant noodle giant Tingyi also said it would raise prices for its signature Master Kong instant-noodle brand by about 14 per cent next month.

The news resulted in widespread panic buying as shoppers cleared supermarket shelves of soap, laundry detergent, shampoo and instant noodles, highlighting public alarm over rising inflation despite government attempts to control it.

Mainland media said Tingyi had already raised Master Kong prices three times since November. A company spokesman blamed the rising cost of materials, such as pork and beef. However, the company's sales revenue and profits hit record highs last year, with revenue up 31.5 per cent at US$6.68 billion and profit up 24.4 per cent at US$477 million.

Government data showed that February's consumer price index increase matched January's at 4.9 per cent, higher than the government's 4 per cent inflation target for the whole year.

Mainland consumers have been hit hard by rising food prices, which jumped 11 per cent last month from a year earlier.

China's central bank has raised the bank reserve-requirement ratio nine times and increased interest rates three times since the beginning of last year to soak up liquidity and to check inflation.

In his annual policy report delivered to the National People's Congress a fortnight ago, Premier Wen Jiabao said curbing inflation was the top priority for his government this year.

Surging prices have fuelled public frustration in recent months in a country where high levels of inflation have historically been associated with unrest. The topic also led to debates among NPC deputies early this month.

The NDRC's price-monitoring centre yesterday forecast that consumer prices would rise about 5 per cent year on year this month.

Instant anguish

Next month, the price of Master Kong instant noodles is expected to go up by: 14%