Inflation fear as 2 brands up milk price

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A customer purchases milk powder at a supermarket in Hangzhou. [CFP]

Foreign milk powder brands Wyeth and Abbott have announced they will raise prices by 10 percent for upgraded products in China, despite the government's efforts to tame inflation.

Media officers at Pfizer, which owns Wyeth, and Abbott both attributed the price hike to the launch of new products and packaging changes, and said that the older versions, whose original prices remain unchanged, will gradually be withdrawn from market.

Other firms including Mead Johnson and domestic dairy producers are not changing prices.

The measures mark a setback in the Chinese price bureau's efforts to control the prices of imported milk powder. The National Development and Reform Commission in early May checked the profit margins of six foreign brands and ordered the companies to comply with China's anti-trust and pricing laws.

The increases took place despite a decrease in raw material prices, the 21st Century Herald reported, citing an unidentified domestic dairy firm manager.

"Low consumer confidence on domestic dairy products offers foreign firms rooms of expansion and price increases," the manager said.

In April, Ausnutria and Friso raised prices of several types of products by 10 percent.

However, consumption of foreign milk powder continue to boom in China despite rising prices. Data from customs showed China imported nearly 50 percent more milk powder from abroad over the first 5 months of this year than the same period last year.

Consumer confidence in China dropped after a milk scandal broke out in 2008 involving illegal additives of melamine.