petrol and diesel
The recent increase in the prices of petrol and diesel may have an impact on the country’s inflation in the coming months. Economists say that its impact will not be limited to petrol pumps only, but everyday household expenses may also increase. On Friday, the price of petrol and diesel was increased by about Rs 3 per liter across the country.
The increase in fuel prices may increase retail inflation by 10 to 25 basis points. At the same time, organizations related to transport and industry say that due to the increasing cost of diesel, toll tax, tires and maintenance of vehicles, companies may soon increase prices in different sectors. According to economists, the biggest concern is not just about petrol and diesel becoming expensive, but its impact can spread to transport, logistics, food delivery, everyday goods and essential services.
Fear of increase in transport expenses
According to the All India Transport Welfare Association, the cost of freight transportation by road may increase by 2.5% to 3% in the next few weeks. Transport operators say that their costs are continuously increasing.
The transport industry is already facing a more than 50% increase in the prices of diesel exhaust fluid (DEF) or urea, used in BS-VI vehicles. Apart from this, the cost of tyres, lubricants, toll tax and maintenance has also increased. AITWA national president Ashok Goyal said that transporters now have no option left but to put some burden on the customers.
Bal Malkit Singh, former president of All India Motor Transport Congress, said that about 50-55% of the truck operating cost is spent only on diesel. In such a situation, the increase in fuel prices will put great pressure on the transport sector.
danger of rising inflation
Experts believe that the effect of the increase in fuel prices will start being visible in the Consumer Price Index (CPI) data of May, while the full effect can be seen from June. IDFC First Bank Chief Economist Gaura Sengupta said that changes in fuel prices alone could increase retail inflation by up to 12 basis points. He estimated the inflation rate for May to be around 3.9%. Meanwhile, Chief Economist of ICRA Ratings Aditi Nair said that due to increase in prices of petrol and diesel, annual retail inflation may increase by about 25 basis points.
Milk prices are also increasing, there is concern
Megha Arora, Director of India Ratings and Research, said that the combined effect of increase in prices of petrol, diesel and milk can increase the CPI inflation rate by about 42 basis points. Experts say that there may be further pressure on the household budget of common people in the coming months, because the prices of many essential commodities already remain at high levels.
