Petorl prise rise again!

Car owners, brace yourselves, because oil marketing companies are planning to raise petrol prices by about Rs 1.50 soon. Why? Because their poor financial situation demands an increase in prices, they say. Both Bharat Petroleum Corporation and Hindustan Petroleum Corporation posted net losses for the quarter ending September.

The proposed hike comes just after petrol prices were increased by about Rs 3.14 per litre in mid-September.7 basis points to inflation (100 basis points make 1 percentage point). A similar increase in diesel prices, in contrast, would have added about 42 basis points to inflation, according to experts. Seven basis points might seem like nothing when inflation is at 5 percent, but it can still have a troubling impact when the wholesale price index is at 9.7 percent.

Let’s also not forget that this may not be the only price hike in store. It’s becoming clear that power tariffs will also need to be hiked, and significantly at that. Incremental hikes in different areas will add to one large chunk of inflationary pressure. That does not make the Reserve Bank of India’s job of bringing down inflation through interest rate hikes any easier.