Price adjustments for oil, electricity and water were among the priorities outlined by the National Development and Reform Commission (NDRC) at its annual planning meeting on Sunday.

Such pricing reforms, however, are a delicate matter as living costs continue to rise for ordinary Chinese, said observers.

China's consumer price index (CPI) for last month, which will be released today by the national statistics bureau, is likely to surpass October's decade-long high of 6.5 per cent.

On the back of surging food prices and an overheating economy, analysts have predicted a CPI of between 6.8 and 7 per cent for November. The index is an inflation benchmark tracking the prices of a basket of selected consumer goods and services.

A sharp rise in fuel prices will only add to the woes of millions of low-income Chinese as the nation's economy heads for a fifth straight year of double-digit growth, expanding by 11.5 per cent year-on-year in the third quarter.

China's oil and gas companies are currently prevented from passing on rising commodity prices to consumers, but the government has acknowledged that this policy has led to shortages as refiners restrict supplies to a loss-making market.

Beijing was forced to raise fuel oil prices by 10 per cent at the start of last month to ease its worst diesel supply shortage in four years.

NDRC head Ma Kai said in a statement released on the government website on Sunday night that pricing reforms of oil and gas would be carried out 'steadily' and promoted in a 'controllable and sequential way'.

He gave no details but said electricity and urban water prices set by the state would also be adjusted next year.

However, Beijing would continue to subsidise farmers by stabilising the prices of electricity, water, fertiliser and energy used in agricultural production, said the NDRC.

The commission's vice-chairman Bi Jingquan was quoted by state media as expressing optimism that inflation could be contained next year despite pressure from rising commodity prices and huge domestic demand.

Mr Bi cited 'favourable factors' that could help to rein in food and other consumer prices, such as bumper mainland harvests, sufficient supply of major commodities, stable financial policies and the recent tightening of monetary policy.

At Sunday's meeting, the NDRC also targeted the railway, postal, telecommunication and health-care sectors for further reforms next year.

In addition, the economic planning body called for improvement in legislation on a variety of issues affecting small and mid-sized companies, such as enterprise investment, bidding, corporate bonds and administrative law enforcement.

It encouraged the establishment of a credit guaranteeing system that would facilitate growth of companies in regions 'with mature conditions'.

clare@sph.com.sg