Mainland regulator urges consumer firms not to increase prices

PUBLISHED : Saturday, 02 April, 2011, 12:00am
UPDATED : Saturday, 02 April, 2011, 12:00am


The mainland's price watchdog is discouraging retailers from raising prices and has vowed to investigate any breaches as it seeks to curb soaring inflation.

The National Development and Reform Commission recently contacted some leading consumer goods manufacturers, urging them to exercise 'social responsibility' and not 'raise prices at random', according to media reports.

The authority also sent inspectors to monitor price changes.

Unilever, the world's second-largest consumer-goods producer, said this week it would postpone a planned price increase after a meeting with the regulator. The price rise was scheduled to take place yesterday.

Unilever, along with three other major hygiene and personal care products manufacturers - Procter & Gamble, Guangzhou-based Liby and Zhejiang-based Nice Group - had earlier planned price rises of 5 to 15 per cent for their products, including washing powder, dishwashing liquid, shampoo and bath gel, from this month.

The news triggered panic buying in cities such as Shanghai and Xian and also sparked government concern over rising consumer prices.

A spokesman for the China Cleaning Industry Association said prices of raw materials used in the industry jumped more than 40 per cent in the second half of last year.

The overall production cost was estimated to increase by 25 per cent considering higher expenses for labour, packing, transport and fuel.

Liby and Nice yesterday did not comment on whether they would follow Unilever's lead and postpone planned price rises.

Rising raw material and food prices are forcing a raft of companies to pass on higher costs to customers.

Tingyi (Cayman Islands) Holding Corp, the biggest maker of packaged food on the mainland, said last week it would add 50 fen (59 HK cents) for some instant noodles this month, but later said it would delay the price rise at the request of the NDRC.

Earlier this year, other manufacturers, including Tsingtao Brewery, China Resources Snow Breweries, Li Ning, Anta Sports Products and Coca-Cola, all raised prices for some of their products.

Inflation rose 4.9 per cent in February, which was higher than expected. It hit a 28-month high of 5.1 per cent in November last year.

Many economists believe it may climb further in the coming months because of rising global commodity prices.