China has decided to increase the prices of diesel and gasoline to record levels, by 300 yuan ($47.53) a tonne, with effect from Wednesday Feb 8.

According to the National Development and Reform Commission (NDRC), China's official economic policymaker, the benchmark retail price of diesel will go up 26 yuan a liter and gasoline price will rise 0.22 yuan per liter. The three to four percent hike marks the first in the country in the last 10 months.

The decision, which was very much foreseen by markets and policy experts, has mainly been attributed to the ongoing fluctuation in international crude prices as well as the crisis in the domestic refineries. The favorable climate on the inflation front seems to have provided the country's policy leaders with some breathing space to go for price reforms.

The ongoing tension in the Middle East, especially the conflict involving Iran and the western countries, seems to have added to the fluctuation in the global oil trade.

The NDRC aims to motivate refiners and ensuring domestic fuel supplies by means of the price hike.