Petrol Diesel Price: The common man could be in for a shock before Diwali. A prominent economist at Oxford Economics has predicted that the central government may slightly increase petrol and diesel prices in November. This is the only and last viable opportunity left for the government to raise fuel prices before the assembly elections in several states early next year.
The government can take steps before the elections
According to Alexandra Harman Prasad, lead economist at Oxford Economics, if prices are raised in November, the increase could be almost half the total 7.5 percent increase in May during the US-Iran War.
According to the report, several states are scheduled to hold elections in the coming year, including Goa, Uttarakhand, Punjab, Manipur, Uttar Pradesh (with UP elections planned for 2027), Himachal Pradesh, and Gujarat. The government has the opportunity to implement this measure even before election campaigns kick off.
When petrol and diesel prices go up, inflation tends to follow
Should the government decide to increase petrol and diesel prices in November, this will directly influence inflation rates. Analysts project that retail inflation might climb to 6.2 percent during the October-December period and potentially reach 6.5 percent in the opening quarter of 2027.
This projection exceeds the Reserve Bank of India’s (RBI) preferred range of 2 to 6 percent. On the other hand, if the government holds off on raising prices in November, inflation expectations could ease by 10 to 30 basis points, though inflation would likely stay relatively high.
The RBI might raise the repo rate further
In response to climbing inflation, the RBI could decide to boost the repo rate during its upcoming policy meetings. The report also highlighted that retail inflation jumped to 5.54 percent in September, marking the highest level since 2024.
Given these circumstances, any adjustment to petrol and diesel prices will have a meaningful effect on everyday household budgets—a matter that’s capturing everyone’s attention.