After LPG, Petrol Prices Slash Could Be On Cards, Predicts Citigroup

Mumbai, Aug 30: The Government’s move to decrease prices of cooking gas could have the dual effect of easing inflation and redirecting attention towards the reduction of gasoline and diesel prices, especially in anticipation of significant festivals and crucial elections, as per analysis by Citigroup Inc.

Economists Samiran Chakraborty and Baqar M. Zaidi noted in a communication that the government's move to lower liquefied petroleum gas (LPG) costs could potentially contribute to a decline in inflation by approximately 30 basis points. This action, combined with a decrease in tomato prices, raises the prospect of inflation dropping below the 6 per cent mark in September.

Despite fluctuations in global crude prices, the costs of gasoline and diesel at the pump have remained unchanged for over a year. Any reduction in fuel expenses may necessitate excise duty reductions, a possibility that can't be ruled out in the run-up to the elections, they indicated.

The country has already imposed stricter controls on exports of staples like rice, wheat, and onions to mitigate food price increases and maintain household budgets.

With five states, including Rajasthan, Madhya Pradesh, and Chhattisgarh, scheduled for elections in the last quarter of the year, followed by a national election in early 2024 where Prime Minister Narendra Modi will seek a third term, there could be deliberations regarding further fiscal measures to manage inflation and bolster rural incomes, according to the economists.