The government has assured consumers that petrol and diesel prices will remain unchanged, even as global crude oil prices surge amid the US-Israel-Iran conflict. Yet Saturday’s rise in LPG prices is a reminder of how difficult it is to contain inflation in a country like India that depends heavily on imported oil. Policymakers often end up spreading the impact across different segments of the economy.
Oil marketing companies have increased the price of domestic LPG cylinders by ₹60 and commercial cylinders by ₹115, taking the cost of a 14.2-kg cylinder in Delhi to ₹913. Officials say the impact is modest—about ₹0.20 per beneficiary per day under the Pradhan Mantri Ujjwala Yojana. Even so, the change underscores how cooking gas is often the first to reflect international price movements. Since LPG is primarily used for household cooking, any price increase feeds directly into the fuel and light component of the inflation basket. Even marginal adjustments can have a significant effect in a country with over 33 crore LPG users, including more than 10 crore households under Ujjwala.
Crude oil prices have risen sharply amid the geopolitical crisis, with Brent futures trading around $93-94 a barrel, the highest level in years. Some countries are already bracing for supply disruptions, with discussions on fuel conservation and even temporary restrictions on vehicle use emerging in parts of the world as governments prepare for potential shortages. For India, which imports nearly 88 percent of its crude oil, any prolonged price spike could quickly complicate inflation management.
For now, the government appears to be absorbing part of the shock rather than passing it fully on to consumers. Petrol and diesel prices have remained largely unchanged for years, leaving oil marketing companies to bear much of the fluctuation in crude costs. This helps prevent fuel inflation from cascading into transport costs and broader consumer prices.
Energy costs, however, ripple far beyond fuel. When crude prices climb, petrochemical inputs used in industries such as tyres, paints, packaging and synthetic textiles become more expensive. Higher gas prices also affect sectors like fertilisers and ceramics.
India also faces strategic risks as much of its crude oil and LPG imports pass through the volatile Strait of Hormuz. Strategic petroleum reserves covering about 74 days of demand and diversified sourcing—including supplies from Russia—provide some cushion. Yet the central challenge remains containing inflation without undermining growth. For now, India appears to be walking that tightrope with cautious pragmatism.