Adding to an already crumbling household budget, the domestic cooking gas (LPG) prices were increased to Rs 1,000 per cylinder on Saturday. This is nearly 24 per cent increase in the LPG cylinder rate in one year from May 2021 to May 2022. In Bangalore, a LPG cylinder costs even more at Rs 1,002.50.
This is the second increase in cooking gas prices for households in six weeks and is sure to add to a fueling kitchen budget and retail inflation in coming months. The retail inflation, which surged to 7 per cent in March, is likely to have gone above 7.5 per cent in April.
From 2014, when the Modi government assumed office till today, domestic LPG prices have increased by 14 per cent. In May 2014, the 14.5-kg LPG cylinder costed Rs 410.
Last month, the rates of piped natural gas (PNG) were increased by Rs 4.25 per unit to cost Rs 45.86 per scm on the back of surge in raw material cost.
Less than a week ago, the price of 19-kg commercial LPG cylinder was hiked by Rs 102.50 in the third straight monthly increase. The 19-kg commercial cooking gas cylinder now costs over Rs 2,355. The constant hike in commercial gas cylinders since the past many months has dealt a severe blow to small eateries, tea stalls and restaurants. Experts believe they may be pushed to use domestic cooking gas cylinders illegally.
Petrol and diesel prices too have surged by more than Rs 10 per litre in the past two months. The pass-through of food and fuel prices is likely to jack up inflaton in April. Apprehending that, the Reserve Bank of India last week hiked key interest rate by 40 basis points. RBI Governor Shaktikanta Das also cautioned about persistent food price pressures in the coming months.
According to Devendra Kumar Pant, chief economist at India Ratings and Research, a 10 per cent increase in fuel price leads to 42 basis points (bps) increase in Consumer Price Index (CPI) based inflation in a year. The wholesale inflation rises by 100 basis points.