Industrial diesel price up by 25%, may fuel inflation

New Delhi: Amid the ongoing West Asia conflict, public-sector oil marketing companies in India on Friday started a selective price hike, with premium petrol becoming costlier by up to Rs 2.35 per litre and diesel used for industrial purposes witnessing a steep 25% jump in rate. The move could make products costlier, leading to higher inflationary pressure.

In Delhi, the price of one litre of diesel sold for industrial uses like manufacturing, logistics and power generation was hiked to Rs 109.59 from earlier rate of Rs 87.67, an increase of Rs 21.92 per litre or over 25%.

However, the price of diesel sold to retail customers like car, bus and truck users remains unchanged. In Delhi, retail users will continue to get normal diesel at Rs 87.67 a litre.

Diesel is used as a key source of energy by various industrial sectors, including manufacturing, logistics and power generation. The increase in cost of production due to higher diesel prices is likely to result in a jump in prices down the supply chain, impacting the pocket of common people.

Inflation has increased sharply in recent months. Retail inflation based on Consumer Price Index rose to 10-month high of 3.21% in February, while wholesale price inflation jumped to 11-month high of 2.13%, as per the latest official data.

Chennai: An employee fills petrol in a scooter at a refilling station in Chennai Friday July 2 2021. Fuel prices in Chennai touched new highs Friday with petrol at Rs 100.13 per litre and diesel at Rs 93.74 per litre.

Public-sector oil marketing companies like Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) also announced up to Rs 2.35 per litre increase in the price of premium or high-grade petrol.

Price of IOCL’s XP95, BPCL’s Speed and HPCL’s Power has been increased in the range of Rs 2.09 to Rs 2.35 per litre.

Oil retailers sell premium petrol under different branding and varying rates. However, the price of normal petrol in Delhi remains unchanged at Rs 94.77 per litre.

“There is no increase in the price of normal petrol. There is some increase only in the premium category,” said Sujata Sharma, Joint Secretary, Ministry of Petroleum and Natural Gas.

She claimed that premium petrol hardly makes up for 2-4% of the entire petrol sold in the country.

Sharma said the decision to increase the price of premium petrol and bulk diesel has been taken by oil marketing companies as the prices have been deregulated for petrol since 2010 and diesel since 2014. “The government does not regulate petrol and diesel prices,” she said.

Analysts felt the elevated energy prices are likely to exert upward pressure on inflation in coming months. Chief Economist at India Ratings and Research (Ind-Ra) Devendra Pant said the Wholesale Price Index (WPI) inflation is likely to rise to 3.7% in March.