State run fuel retailers have increased price of petrol by around Rs 2.5 per litre, barely a month after a Rs 3 per litre increase in response to rising international crude oil prices. Petrol is likely to cost around Rs 63 per litre in Mumbai after the hike.
The hike was prompted by a global surge in commodity markets, particularly in the last 6 weeks. Brent oil, for example, touched $99.20 a barrel on Friday, the first time since the beginning of the global recession in October 2008. Crude oil prices have been tracking the spikes in the prices of other commodities such as agricultural commodities such as coffee, maize, soya and rubber, most of which set new records in the past few weeks in international markets.
Petrol prices are being hiked in concert by the three state-owned petroleum retailers, Indian Oil, Hindustan Petroleum and Bharat Petroleum.
Petrol prices were set free by the government six months ago, primarily because the 80-100% taxes were threatening to ruin the three state-owned companies. Petrol costs only half as much in the international markets.
The oil companies have also increased aircraft fuel prices by 2%, around Rs 1 per litre.
The hike in petrol prices is likely to add to the already high inflation pressure. Even at the wholesale level, food prices are higher by around 17% compared to the same period last year — a period when prices were already high.
The government had said that it will step in to freeze the right given to petroleum companies to increase prices as they wanted.
