Petrol price hike to impact inflation marginally: Industry
The hike in petrol prices will lead to a small increase in inflation, industry chambers CII and Ficci said on Thursday.business Updated: Sep 15, 2011 21:30 IST
The hike in petrol prices will lead to a small increase in inflation, industry chambers CII and Ficci said on Thursday.
However, they said that there was no alternative for the government-owned oil companies but to revise the prices in the backdrop of weakening of rupee which resulted in higher landed cost of crude oil.
"The hike was necessary for controlling the under-recoveries of the oil marketing companies. Although this may add a bit to inflation, the alternate scenario of not hiking would mean a further increase in the fuel subsidy," CII director general Chandrajit Banerjee said.
A similar view was expressed by Ficci. "The impact (on inflation) will be there. Of course, it will hurt. But if you don't do this, subsidies increase will lead to fiscal deficit," chamber secretary general Rajiv Kumar said.
Taking into account the exchange rate differences such price changes are in order, he said.
The oil companies hiked petrol prices by Rs 3.14 per litre. This is the second hike in four months. Oil companies had last hiked petrol price by Rs 5 per litre on May 15.
General and food inflation remain near the double-digit, causing problem for the common-man.