From vegetables to commute: How petrol, diesel price hike could hit your pocket

The Centre on Friday hiked petrol and diesel prices by Rs 3 per litre with immediate effect as global crude oil supplies remain disrupted due to the ongoing West Asia crisis. Additionally, CNG price was also increased by Rs 2 per kg.

The move is expected to act as a cushion for state-owned oil companies and help recover part of the losses caused by increasing crude oil prices.

Since the start of the US-Israel war with Iran, crude oil prices had surged close to $120 per barrel before easing to the $100–$105 range. The price before the escalation on February 28 was below $75 per barrel, meaning a jump of nearly 50 percent during the crisis.

With the increase, petrol in Delhi will now cost Rs 97.77 per litre and diesel Rs 90.67. In Bengaluru, petrol prices have risen to Rs 106.17 per litre, while diesel will cost Rs 94.10 per litre.

Hike in petrol, diesel and CNG prices not only affect transportation, but also a host of other sectors, as fuel acts as the backbone of the economy. This can now result in inflation and economic activity.

Food, daily essentials and FMCG

The immediate impact is expected to be felt in prices of essentials like vegetables, fruits, dairy produces and packaged foods. Additionally, items like edible oil could also become costlier in the near future.

This is because logistics and transpiration cost will increase. Transporters usually avoid passing on the burden immediately after smaller price increases. However, if fuel prices remain elevated for a prolonged period, logistics costs are likely to rise.

Perishable goods could cost more as refrigeration, cold storage and delivery is dependent majorly on fuel.

Tourism, logistics and aviation

The already struggling aviation sector could face more hikes. Several domestic airlines have announced fuel surcharges and further increase in aviation turbine fuel (ATF) prices may push airfares even higher.

Further, the tourism sector may feel the heat during the holiday season as travel costs rise.

The tourism sector could also come under pressure ahead of the holiday season as travel costs rise.

Cab aggregators such as Uber, Ola and Rapido are also expected to revise fares, passing the burden on to the customers.

Further, instant delivery platforms and logistics companies could also face higher operating costs, affecting the delivery ecosystem.

Farming sector

India's rural areas is dependent heavily on diesel for fuelling tractors, irrigation pumps, transportation and fertiliser movement. Higher fuel costs are expected to increase cultivation expenses, which could eventually translate into higher food prices.

Shortage in crude oil has already caused concerns over fertiliser production despite Centre assuring there is enough stock for the upcoming kharif season.