Petrol price was today hiked by Rs 1.50 per litre and diesel by 45 paise as state-owned oil companies exercised newly bestowed pricing freedom.
The first hike in petrol price in over three-and-a-half months and the second rise in diesel rates in one month exclude local sales tax or VAT and the increase for consumers at petrol pumps would be higher.
Petrol price in Delhi will go up by Rs 1.80 to Rs 69.06 per litre with effect from midnight tonight after including 19 per cent VAT. Diesel rates would go up by 51 paise to Rs 48.16 a litre.
The increase in auto fuel prices, which come on back of a small hike in diesel price last month, is expected to fuel inflation that stood at three-year low of 6.2 per cent in January.
Indian Oil Corporation (IOC), the nation's largest fuel retailer, announced an increase of Rs 1.50 per litre in petrol price as international benchmark oil prices climbed 7.5 per cent.
The diesel rate was raised in line with last month's government decision to allow oil firms to raise prices in small dozes every month till over Rs 10 a litre loss on sale of India's most consumed fuel is totally eliminated.
Even after today's increase and a similar hike effected on January 18, oil firms will continue to lose Rs 10.27 a litre on diesel as cost of raw material (crude oil) has risen by 4 per cent to USD 113.24 per barrel.
Rates will vary by a few paise on petrol pumps owned by Hindustan Petroleum Corp Ltd (HPCL) and Bharat Petroleum Corp Ltd (BPCL) as state-owned firms maintain differential rates to avoid being accused of acting as a cartel.
Petrol price was last revised on January 18 when the rate was cut by 25 paise a litre. After including VAT, this translated into a reduction of 30 paise to Rs 67.26 a litre in Delhi.
The reduction in rates on that day coincided with the government decision to give oil firms freedom to raise diesel prices in small monthly doses to eliminate all of the losses on the fuel. Oil firms hiked diesel price on that day by 45 paise, which after including VAT led to a 50-paise increase to Rs 47.65 a litre in Delhi.
The price of petrol was last hiked on October 27 when rates went up by 29 paise after government raised commission paid to petrol pump dealers.