Bright Dairy and Food and Sanlu Group, two leading domestic dairy makers, have won government approval to raise milk product prices, according to the National Development and Reform Commission (NDRC).

This was the first time the top economic planner had approved such increases since it announced price regulations in January as part of a package of moves to curb inflation.

Bright Dairy hasn't yet said how much it would raise prices, but the China Business News reported on Friday that company sources told it the average hike would be 14 percent. Most increases would be imposed in the eastern part of the country. Sanlu Group declined comment.

Prices for pure milk products nationwide are relatively low and a small price hike "will not be an issue for ordinary people", said Wang Dingmian, the deputy chairman of the Guangdong Dairy Association. "But for some new products like breakfast milk and cereal milk, prices can be raised too much."

According to a circular issued by the NDRC on January 17, major companies must submit price hike proposals to the government for official approval 10 working days beforehand. Wang said that the NDRC's price intervention mechanism was likely to cover more dairy producers in the future.

Soaring prices of staples such as grain, pork and cooking oil since May 2007 pushed China's inflation rate to a new high in February, with the consumer price index up 8.7 percent year-on-year, the biggest jump in nearly 12 years.

(Xinhua News Agency March 29, 2008)