Domestic cooking gas LPG price has been raised by Rs 29 per cylinder, marking the second increase in three months as state-owned fuel retailers continue to grapple with elevated global energy costs.
The price of a 14.2-kg LPG cylinder in Delhi will rise to Rs 942 from Rs 913 with effect from June 7, according to industry sources.
The increase follows a Rs 60-per-cylinder hike on March 7 after the conflict in West Asia disrupted global energy supplies and drove up international fuel prices. Industry sources said that the increase had only partly offset losses incurred on domestic LPG sales.
State-run oil marketing companies were estimated to be losing about Rs 703 on every LPG cylinder sold before the latest revision, the sources said.
The LPG price hike comes amid a broader round of fuel price increases. Petrol and diesel prices have been raised by a cumulative Rs 7.50 per litre since mid-May, while compressed natural gas (CNG) rates have increased by about Rs 6 per kg.
Despite the recent increases, oil companies continue to sell petrol and diesel below cost, incurring losses of around Rs 11 per litre on petrol and Rs 33.6 per litre on diesel, according to industry sources.
The government has so far avoided a full pass-through of higher international energy prices to consumers, absorbing part of the increase through state-owned fuel retailers as global crude oil and fuel markets remain volatile.
Fuel price surge could drive consumer prices higher: Crisil
Rising petrol and diesel prices are poised to add fresh inflationary pressures to India’s economy, with higher transport and manufacturing costs expected to feed through to consumer prices in the coming months, Crisil said in a report on Tuesday, June 2.
Petrol and diesel prices have increased by about Rs 7.5 per litre since May 15, and further increases remain likely if global crude oil prices stay elevated.
“With oil marketing companies gradually paring their losses (or under-recoveries), cumulative hikes could move closer to Rs 10 per litre in the near term,” the rating agency said.
“The broader effect will reverberate across the economy through higher transport costs, pushing up both food and core inflation.”
The direct impact of higher fuel prices on Consumer Price Index (CPI) inflation is estimated at around 36 basis points for a Rs 7.5-per-litre increase in petrol and diesel prices, rising to nearly 48 basis points if cumulative hikes reach Rs 10 per litre.
