Petrol price and inflation

Petrol price and inflation

Subject: Economy

Context: The government’s revenue collections from excise duty on petroleum products jumped over 74 per cent year-on-year to Rs 3.45 lakh crore in 2020-21, according to government data.

Concept:

Government revenue and petrol prices

• The country has seen a 21.7 per cent increase in the price of petrol and diesel since the beginning of the year.
• The excise duty collected from petroleum products formed 32.07 per cent of the total indirect tax revenue in 2020-21, up from a 20.7 per cent share in 2019-20. The rising fuel prices have been feeding into inflation at both wholesale and retail level.
• The government’s revenue collections from excise duty on petroleum products surged 74.3 per cent to Rs 3.45 lakh crore in 2020-21.

Inflation

• The rising fuel prices have been impacting inflation at both wholesale and retail levels. Inflation rates for items such as minerals, edible oils, oilseeds, dairy and poultry items have gained momentum over the last one year, with the cascading impact of elevated fuel prices clearly visible in segments such as manufactured products such as rubber, plastic products, furniture and transport and communication.
• The looming concern is that the sharp rise in producers’ prices will progressively feed into the final consumer goods basket, translating into consumer price inflation with some lag.
• High state and Central taxes on fuel along with high crude oil prices have translated into the wholesale inflation for ‘crude, petroleum and natural gas’ spiking to 55.5 per
• On the retail inflation front, the trend has been mirrored with the inflation rate for the ‘transport and communication’ segment