CHINA has raised fuel prices by more than 3 percent, the biggest increase since a new pricing mechanism was implemented, in response to higher crude rates in global markets.

In Shanghai, the ceiling price for 93-octane gasoline is now 7.70 yuan (US$1.25) per liter, up from 7.44 yuan, while 97-octane gasoline is 8.19 yuan from 7.92 yuan. Zero-grade diesel is 7.60 yuan, up from 7.33 yuan.

The new prices take effect from today.

Nationwide, gasoline went up by 325 yuan per ton and diesel 310 yuan, or 0.24 yuan per liter for 90-octane gasoline and 0.26 yuan per liter for zero-grade diesel on average, according to the National Development and Reform Commission, which sets energy prices.

Shanghai's prices are among the highest in China, in part because of higher fuel standards.

The price increases, as well as recent heavy rainfall experienced in many parts of the country, will push up consumer prices, Han Jingyuan, an analyst at www.315.com.cn, a commodity-related information provider, told Xinhua news agency.

Despite the hefty fuel price increase, its impact on downstream industries is not expected to last long, analysts said.

Han said that oil prices are not expected to climb further in the near future, as slowing economies in the European Union and China will sap demand.

Zhang Yonghao, an analyst at www.chem365.net, another commodity information consultancy group, said the price hike will help improve oil refiners' profits amid lackluster demand, Xinhua reported.

China's consumer inflation rose 2.7 percent year on year in June, up 0.6 percentage points from a month ago.

Since China last adjusted prices on July 5, global crude prices have risen steadily following strong US economic data, lower crude inventories as well as tensions in the Middle East, with the Brent futures advancing to a three-month high and the West Texas Intermediate crude, a benchmark in the US, hitting a one-year high.

China launched the new pricing mechanism in late March, under which rates are reviewed every 10 working days according to changes in global crude oil prices, compared with 22 working days before.

Domestic fuel prices are adjusted when international crude prices reflect a change of more than 50 yuan per ton for gasoline and diesel over a period of 10 working days.

Price changes tend to be smaller - in many cases at around 1 percent - than before under the new system because they are adjusted more frequently.