Petrol, diesel prices hiked after years. Here's what else could get costlier

Rising petrol and diesel prices are starting to push up transport and household costs across India. Economists say the impact could spread to food, deliveries, air travel and inflation if crude stays high.

In Short

• Transport costs may rise first through pricier commuting, buses and freight
• Higher diesel rates can push up food costs across kitchens
• Delivery platforms may trim discounts or raise charges and order thresholds

Petrol and diesel prices in India were hiked by around Rs 3 per litre on Friday, marking the first major fuel price increase in nearly four years as state-run oil companies grapple with surging global crude oil prices amid tensions in West Asia.

Following the hike, petrol prices in Delhi rose to around Rs 97.77 per litre, while diesel climbed to about Rs 90.67 per litre.

The increase also comes shortly after Prime Minister Narendra Modi appealed to citizens to reduce fuel consumption among other measures as rising crude oil prices threaten India’s import bill.

But the latest hike may not be the last.

Experts warn that petrol and diesel prices could continue rising over the coming days — and potentially even months — if the crude oil crisis linked to the escalating West Asia conflict worsens further.

“The fuel price hike was very important. The ground reality is that oil supply has become more expensive and uncertain,” Rahul Ahluwalia, Founder-Director of the Foundation for Economic Development, told IndiaToday.in.

While the immediate impact is visible at fuel stations, economists say the real effect of rising fuel prices spreads much wider. Over time, it can influence food prices, transport costs, online deliveries and even monthly household spending.

Daily commuting to become costlier

The most immediate pressure is on transportation costs. Petrol price hikes increase commuting expenses for people using cars and bikes, while higher diesel prices affect buses, trucking networks and goods transportation across the country.

Over time, this can translate into higher auto fares, cab fares and freight charges, especially if elevated fuel prices persist.

Your kitchen budget could come under pressure

The impact does not stop with transportation. Since a large share of India’s food supply moves through road transport, higher diesel prices often end up affecting kitchen budgets as well.

Vegetables, fruits, milk, grains and packaged products become more expensive to transport, and these additional costs are eventually passed on to consumers. If fuel prices remain elevated for long, food inflation could also worsen.

India has already started seeing early signs of cost pressures elsewhere. Amul and Mother Dairy recently raised milk prices by Rs 2 per litre, partly citing higher fuel and logistics costs.

“It is important that prices should reflect reality otherwise consumer behaviour will not adjust and this distortion will cause more pain later in the form of shortages, fiscal crisis and lower standards of living for everyone,” Ahluwalia said.

Online deliveries and shopping may get more expensive

Online deliveries and e-commerce services may also become costlier. Food delivery apps, grocery platforms, courier companies and e-commerce firms typically face higher logistics expenses when fuel prices rise.

Companies may respond by increasing delivery charges, reducing discounts or raising minimum order values for deliveries.

Higher fuel prices can squeeze household spending

Rising fuel prices can also pressure household budgets more broadly because transport costs feed into almost every sector of the economy.

As everyday expenses rise, families often cut back on discretionary spending, postpone purchases or reduce leisure travel. This can eventually affect broader consumer demand in the economy.

Wholesale inflation in India has already climbed sharply, with rising energy costs emerging as a major driver.

Rural households may feel diesel impact more sharply

The rural economy may feel the pressure even more sharply through diesel prices. Farmers rely heavily on diesel-powered tractors, irrigation pumps and transport vehicles.

Higher fuel costs can therefore raise agricultural expenses and eventually add pressure on food prices later.

Ahluwalia also said India should allow the rupee to depreciate further instead of treating it “as a national symbol of strength”.

Why fuel prices matter so much in India

Fuel prices hold outsized importance in India because transport costs influence nearly every sector, from manufacturing and agriculture to retail and services.

Economists warn that sustained increases in crude oil prices could keep inflation elevated and increase pressure on India’s import bill.

For consumers, however, the impact is often straightforward: when fuel prices rise, the cost of daily life gradually rises with them.

- Ends