Rising fuel prices are likely to add fresh pressure on Indian consumers already struggling with the increasing cost of essential commodities. Economic experts have warned that petrol and diesel prices may witness another sharp hike in the coming weeks, with leading financial services firm MK Global estimating that fuel rates could rise by as much as Rs. 10 per litre. The anticipated increase comes amid soaring global crude oil prices triggered by escalating tensions between the United States and Iran and the worsening geopolitical situation in West Asia.
State-run oil marketing companies had already increased petrol and diesel prices by Rs. 3 per litre on Friday. Although the Central government reduced excise duty on fuel imports by Rs. 10 per litre on March 27, the continued surge in international crude oil prices has significantly impacted the financial health of oil companies. According to industry estimates, oil firms are currently suffering losses of nearly Rs. 17 to Rs. 18 on every litre of petrol and diesel sold in the domestic market.
Analysts estimate that oil marketing companies could incur losses ranging between Rs. 57,000 crore and Rs. 58,000 crore during the current quarter if global crude prices remain elevated. Experts believe that in order to offset these mounting losses, fuel companies may be forced to increase petrol and diesel prices by up to Rs. 10 per litre, either in a phased manner or through a one-time revision over the next two to three weeks.
The inflationary pressure is not limited to fuel alone. India’s leading dairy brands, Amul and Mother Dairy, have also increased milk prices by Rs. 2 per litre. This marks the second price hike by the companies in the last 13 months. Market observers believe several regional dairy companies may soon follow suit, adding further burden on household expenses.
Experts have warned that rising fuel costs could trigger a broader increase in retail inflation across sectors. Megha Arora, Director at India Ratings and Research, stated that higher prices of petrol, diesel, milk, and cooking gas could increase India’s retail inflation rate by nearly 0.42% in the coming months. A rise in diesel prices is expected to increase freight charges for trucks, which may subsequently drive up the prices of vegetables and essential goods across the country.
Urban transportation and logistics services are also likely to become more expensive as petrol prices rise. Auto fares, app-based cab services such as Ola and Uber, and logistics operations are expected to witness higher operating costs. Farmers may also face additional financial strain as tractors and irrigation pump sets heavily depend on diesel.
Economist Santosh Mehrotra expressed concern that every 10-dollar increase in international crude oil prices could adversely impact India’s GDP growth projections while simultaneously accelerating inflation. Rating agencies are now projecting that the country’s inflation rate could rise from the current 4.6% to nearly 5% in the coming months if global crude prices continue their upward trend.