The first price increase in five months saw retailers raising the base price of petrol and diesel by 80 paise a litre. The actual increase at the pump will be higher by a few paise in accordance with the incremental impact of VAT in each state. Petrol in Kochi will cost Rs 105.18 per litre and diesel Rs 92.40 per litre, while in Thiruvananthapuram, a litre of petrol will cost Rs 106.36 and diesel Rs 93.47.
The price of household LPG (liquefied petroleum gas) refills has also been raised by Rs 50 each, marking the first increase in nearly six months. LPG prices are at record levels after the hike and the consumers will have to bear the entire brunt since the subsidy has been removed since May 2020.
The sharp increase, though unavoidable, will dent household budgets by making goods and services costlier. PHDCC president Pradeep Multani said the price-cost margins of businesses will be impacted as raw materials and utilities will cost more.
Costlier fuel will also stoke inflation as LPG, petrol, diesel and jet fuel — the prices of which were raised by 18% last week — have a weight of 6.8% in the wholesale price index. This could prompt the RBI to tighten monetary policy, which will impact interest rates and instalments.
The inflationary pressure could rise further in the coming days as fuel retailers are expected to raise prices further to cover a better part of their under-recovery, currently estimated at Rs 18-20.