Analysts told the Times of India that the fuel price hike could add between 10 and 25 basis points (bps) to headline inflation, while transporters and industry groups say the rising cost of diesel, tolls, tyres and vehicle maintenance may soon force companies to raise prices across sectors.
The biggest concern, economists say, is not just the direct rise in fuel prices but the ripple effect it may create through transportation, logistics, food delivery, manufactured goods and essential services.
According to the All India Transporters Welfare Association (AITWA), freight charges for goods moved by road are likely to rise by 2.5-3% in the coming weeks as transport operators struggle with mounting expenses.
Transporters say the industry has already been under pressure due to a sharp jump in Diesel Exhaust Fluid (DEF) or urea prices used in BS-VI vehicles, which have risen by more than 50%. At the same time, tyre prices, lubricants, toll charges and maintenance costs have also increased.
“Transporters are left with no option but to partially pass on the burden to customers,” said Ashok Goyal, national president of AITWA.
Former All India Motor Transport Congress president Bal Malkit Singh said diesel alone contributes nearly 50-55% of total truck operating costs, making the latest fuel hike particularly painful for the sector. “With increases in fuel prices, tolls, insurance, tyres, maintenance and compliance expenses, transporters are struggling for survival,” he said.
Economists believe the impact of the fuel price revision will begin appearing in the May Consumer Price Index (CPI) data, while the full effect may become visible from June onward.
Several financial institutions have already revised their inflation forecasts.
Gaura Sengupta, chief economist at IDFC First Bank, said the latest fuel price change alone could add 12 basis points to headline CPI inflation. She estimated May inflation at around 3.9%.
“We expect a cumulative rise of up to 10% in retail petrol and diesel prices over the next few months,” she said, adding that FY27 CPI inflation could average 4.9%.
ICRA Ratings chief economist Aditi Nayar said the fuel hike may raise average retail inflation by around 25 basis points annually. The agency has revised its May 2026 inflation forecast to 4.3% from the earlier 4.1%.
Radhika Rao, senior economist at DBS Bank, said a 3-5% increase in fuel prices could add 15-25 basis points to headline inflation, apart from triggering second-round inflationary effects.
“The concern is the cascading impact through transportation, logistics and manufactured goods,” economists noted.
Adding to the pressure, rising milk prices are also expected to contribute to inflation.
Megha Arora, director at India Ratings & Research, said the combined effect of higher petrol, diesel and milk prices could increase CPI inflation by around 42 basis points overall.
“The actual impact is likely to be higher through fuel-dependent industries like transportation and related sectors,” she said.
The latest fuel price increase comes at a time when consumers are already facing elevated costs in several categories, raising concerns that household budgets may come under further strain in the months ahead.