UPDATE 1-China says fuel hike to have limited CPI impact

(Adds comments, background)

BEIJING, June 20 (Reuters) - The big increase in Chinese retail fuel prices will have only a limited impact on consumer price inflation, a National Development and Reform Commission (NDRC) official said to state radio on Friday.

The comments by Xu Kunlin, vice head of the pricing department at the NDRC, the country's powerful planning agency, was the first official statement about the likely effect of the surprise price increase on consumer inflation.

"The impact will be only less than one percentage point," Xu said. His projection was in line with that of most economists.

"The gasoline price hike is unlikely to change the declining trend of CPI," said Goldman Sachs economists Hong Liang and Yu Song, in a client note.

Although China's inflation dipped slightly in May to 7.7 percent, it was still near a 12-year high.

Beijing raised retail gasoline and diesel prices by 17-18 percent on Thursday, after resisting the mounting pressure of soaring global oil prices for weeks.

Xu said the price rise would ease the pressure on refiners, who were losing money from the low prices.

In addition, refiners will provide more fuel to the retail market as a result, and demand for these products will be curbed, he said.

Global oil prices initially plunged on China's unexpected move, but gained more than $1 later on Friday as the market continued to digest the impact from the announcement. (Reporting by Langi Chiang; Editing by Kirby Chien)