In March 2012, the prices of fuel went so high and this led to increases in prices of other products. It is notable that most products are directly or indirectly related to fuel as one among the major raw materials. With the sophistication of production methods, firms are turning into capital-based rather than labor-based states.
As a result, production of most products in the company will be done by machines, which are run by fuel. Therefore, increase in fuel prices in China led to increase in production costs and eventually increase in product costs. These costs are transferred to the customer reducing his purchasing power and hence increase in the CPI, consumer price index.
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