Spiralling fuel prices trim domestic demand by 4% in April
The fall in consumption is clearly attributed to inflation, prompted by a rise in fuel prices, which in turn is a direct result of the ongoing Ukraine-Russia war
The country is steadily coming out of the grip of COVID, but a sharp hike in fuel prices in the last couple of months reduced consumption of petroleum products by 4% in April as compared to the previous month.
The fall in consumption is clearly attributed to inflation, prompted by a rise in fuel prices, which in turn is a direct result of the ongoing Ukraine-Russia war.
According to the Petroleum Planning and Analysis Cell (PPAC) of the Ministry of Petroleum and Natural Gas, India’s consumption was 18.64 million tonnes in April as compared to 19.41 million tonnes in March.
India’s fuel consumption in March this year (19.41 million tonnes) was the highest in the last three years, boosted by easing COVID-related curbs. But a sharp rise in international fuel prices put pressure on domestic consumption of petrol and diesel, resulting in drop in sales.
The global price hike was mainly a reaction to uncertainty and disrupted supplies of crude oil from Russian, following the country’s invasion of Ukraine.
The fuel hike had a cascading effect on India’s retail inflation, which rose to an 18-month high in April, largely driven by rising fuel and food prices as per a Reuters poll.
Therefore, while the demand for fuel in April 2022 went up by 12%, as compared with the demand in April 2021, a big jump in international fuel prices this year cut to the consumption as compared to March 2022.
Sales of essential petroleum products like the liquefied petroleum gas (LPG), which is necessary for cooking, fell by 12.9% to 2.16 million tonnes from March. At the same time, naphtha sales dropped 4.5% to 1.06 million tonnes from March.
Development activities also suffered as sales of bitumen, a raw material used for making roads, were 15.5% lower, while fuel oil use advanced 8.6% in April.
