India raises petrol prices by 9.2 per cent

MUMBAI: India raised petrol prices by 9.2 per cent and diesel prices by 6.6 per cent yesterday bowing to pressure from refiners who have complained of losses because domestic fuel prices have not kept up with rising global oil prices.

Analysts say increasing prices, which had been frozen for nine months, may dampen oil demand in India and stoke inflation, and could prompt the central bank to raise interest rates in July.

KEY POINTS: The government said it would cut customs duty on petrol and diesel to 7.5 per cent from 10 per cent, with the changes taking effect at midnight (1830 GMT).

The price of petrol in New Delhi was raised 4 rupees to 47.49 a litre while diesel rose 2 rupees to 32.45 a litre. Tax variations mean prices vary across India but they will rise by a similar amount.

The government said it would issue 280 billion rupees in bonds to compensate state oil companies for their losses.

The annual inflation rate for the week ended May 20, based on wholesale prices, was at 4.74 per cent higher than 4.32 per cent a week earlier.

India, Tuesday, Reuters