Fuel price hike will hit household budgets, business

NEW DELHI: State-run retailers, who control 90% of the market, haven’t revised pump rates since November 4 under an informal government directive despite a 53% rise in crude cost. The sharp increase in fuel prices will dent household budgets by making goods and services costlier. 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 hit interest rates and instalments. PHDCC president Pradeep Multani said the price-cost margins of businesses will be impacted as raw materials and utilities will cost more.
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. Global prices are also not showing any sign of coming down soon.