Fuel price rise impacts consumption in India

Fuel price rise impacts consumption in India

The rising fuel prices is impacting demand conditions in India that is looking for an accelerated recovery of the economy post Covid-induced lockdowns and disruptions.

The rising fuel prices are impacting demand conditions in India that are looking for an accelerated recovery of the economy post-Covid-induced lockdowns and disruptions.

According to official data, the country’s fuel consumption fell sharply in February, the second consecutive month when demand is showing signs of a slackening amidst rising fuel prices.

The consumption slowdown in February is the lowest since September when it had begun becoming clear that the worst is over and demand is picking up.

According to the oil ministry’s Petroleum Planning and Analysis Cell (PPAC), consumption of fuel ( largely petrol and diesel ) fell 4.9 per cent in yoy February to 17.2 million tonnes. The demand also slipped 4.6 per cent on monthly basis indicating that various hiccups still remain on the path of full recovery for the Indian economy.

A clearer indication that recovery is still some way off can be gauged by seeing the diesel consumption data as the fuel is the prime source of transport for all kinds of goods in the country and accounts for about 40 per cent of overall refined fuel sales in India. The consumption of Diesel fell 3.8 per cent to 6.55 million tonnes in February on a month on month basis and declined 8.5 per cent year-on-year.

Petrol sales, on the other hand, fell 6.5 per cent to 2.44 million tonnes in February and by about 3 per cent from a year earlier.

Both the fuel is on the boil in the country with the pump price of petrol and diesel rising by 26 times in 2021 by Rs 7.46 and Rs 7.60 per litre respectively so far this year. Petrol prices have also breached the Rs 100 a litre mark in several cities.

Contrary to auto fuel prices, sales of cooking gas or LPG cylinders grew 7.6 per cent YoY in February to 2.27 million tonnes. This is largely on account of government t subsidies and the provision of a free connection to Ujjawala customers.


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