HT Digital
Tuesday, October 1: As the festive season approaches with Durga Puja and Diwali on the horizon, consumers and businesses in India are facing another financial pinch. The prices of 19 kg commercial LPG cylinders have been increased once again, marking the third consecutive month of price hikes by the country’s Oil Marketing Companies (OMCs). Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL) have jointly raised the prices of commercial cylinders by Rs 48.50, which took effect starting October 01, 2024.
In the nation’s capital, New Delhi, the 19 kg commercial LPG cylinder will now cost Rs 1,740, while the price in Mumbai has been set at Rs 1,692.50. In Kolkata, the new rate for the commercial cylinder is Rs 1,850.50, and Chennai sees the highest cost, with a 19 kg cylinder now priced at Rs 1,903. These increases are expected to have a significant impact on businesses, particularly restaurants, hotels, and other commercial establishments that rely heavily on LPG cylinders for their operations. The decision to hike prices just before the major festive season is likely to strain budgets further at a time when consumer spending is already high due to festival-related purchases and celebrations.
This latest hike follows similar increases over the past few months, making it a recurring issue for businesses that are already grappling with rising input costs. The OMCs have consistently raised the prices of commercial LPG cylinders, citing global oil prices, currency fluctuations, and rising inflation as contributing factors. With this latest increase, the cumulative rise in LPG cylinder prices has now reached Rs 94 over the past three months. This surge is seen as a considerable burden for small and medium enterprises, many of which are still recovering from the economic challenges posed by the pandemic and other market conditions.
The timing of the price hike ahead of Durga Puja and Diwali has sparked frustration among many business owners. These festivals are crucial periods for the hospitality industry, retail sector, and food vendors, as they witness a significant surge in demand. However, the rising costs of essential items such as cooking gas may force businesses to either raise their prices or absorb the costs, both of which present challenges. Some fear that passing the burden of the price hike to consumers may dampen the festive spirit and reduce customer footfall, while others are concerned about the narrowing profit margins they now face.
The festive season, traditionally a time of economic activity and business boom, may see a slowdown due to these increased operational costs. Restaurants and food chains, in particular, are heavily reliant on LPG cylinders, and the recurring price hikes could translate into higher menu prices for customers. For small street food vendors, who already operate on thin profit margins, the increase in LPG prices could make it difficult to remain profitable without raising prices, which could in turn affect their customer base. Similarly, catering businesses, which often experience a surge in bookings during the festival period, are likely to feel the pinch as they balance service delivery with rising costs.
The impact of this price hike is not limited to businesses alone. Consumers across the country are also likely to be affected indirectly. The hospitality sector may have to raise prices to compensate for the higher LPG costs, leading to more expensive dining and food services during the festive period. Additionally, with household budgets already stretched by rising inflation and other cost-of-living increases, the timing of this commercial LPG price rise comes as another blow to consumers preparing for festival celebrations.
This marks the third straight month in which LPG prices have been hiked by the OMCs, signaling a broader trend that could continue into the foreseeable future. The OMCs, which dominate the distribution of LPG in India, have pointed to various external factors influencing these price increases, including the international price of crude oil, currency depreciation, and logistical costs. As these factors continue to evolve, further increases in cylinder prices are not being ruled out, raising concerns for businesses and households alike.
Moreover, the rising cost of commercial LPG comes at a time when the government has been making efforts to manage inflation and provide relief to certain sectors of the economy. However, for businesses that are highly dependent on LPG, such as the food and beverage industry, these price hikes are making it increasingly difficult to maintain operational viability. The situation is further complicated by the fact that businesses have limited options when it comes to substituting LPG with alternative energy sources, given the infrastructure and cost constraints involved.
Looking ahead, businesses and consumers are likely to watch closely for any signs of stabilization or further increases in the cost of commercial LPG cylinders. For now, the focus is on how to navigate the immediate impact of this price hike, particularly with the upcoming festive season—a critical time for economic activity in India. As businesses brace for the challenges ahead, the question remains whether the OMCs will introduce any relief measures or whether additional price hikes are on the horizon.
In the meantime, consumers and businesses across New Delhi, Mumbai, Kolkata, and Chennai are facing higher costs, with no immediate respite in sight. With the festive season fast approaching, this LPG price hike is likely to remain a key issue for businesses trying to balance rising costs with consumer expectations.
