InvestorQ : Why are petrol and diesel prices going up consistently and do you see that impacting inflation?
Juvina Maggie made post

Why are petrol and diesel prices going up consistently and do you see that impacting inflation?

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Deepa Salunkhe answered.
4 months ago
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It could actually be a major worry for inflation levels in the economy as petrol and diesel prices having been going through the roof. Last week, it touched a new high after the rates of petrol and diesel were hiked for the fourth time during the same week. Petrol prices have now scaled to Rs.92.28/litre in Mumbai while diesel stands at Rs.82.66/litre.

Prices have moved up by Rs.1/litre in a single week. There is more pressure on oil prices likely. With Saudi Arabia pledging further supply cuts at the latest OPEC meet, crude could be under greater pressure and Brent prices could go further up. There is also the risk that the government and OMCs have limited capacity to absorb any crude price hike.

In India, the government had used the fall in crude prices to enhance revenues by raising excise on petrol and diesel to all-time peak levels. Now with the fiscal situation in a major shortfall, the government only needs more, not less revenues. Ironically, Indian fuel prices are at a peak when Brent Crude prices are 50% below the 2014 levels.

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