Anticipated fuel price hike may hit households hard; 8 in 10 likely to cut non-essential travel

A potential increase in fuel prices following recent elections, combined with global supply risks due to tensions in the Middle East, is expected to put significant pressure on Indian households, according to a nationwide survey by LocalCircles. 

“As prospects of a hike in price of LPG cylinder for domestic use and transport fuels loom, the study shows that 1 in 2 households surveyed are likely to cut LPG usage to cope with rising LPG cylinder prices, and in the case of transport fuel, 8 in 10 households are likely to cut on non-essential travel,” the survey said. 

The survey, which gathered over 43,000 responses across 333 districts, found that households are already preparing to adjust their spending patterns in anticipation of higher costs of petrol, diesel, and LPG. 

Fuel price concerns are being driven by a mix of global and domestic factors. Escalating conflict in the Middle East, which accounts for a major share of global oil supply, could disrupt shipments through key routes like the Strait of Hormuz. For India, which imports over 80% of its crude oil, this could translate into higher import costs, supply constraints, and inflationary pressure.

At the same time, domestic fuel prices, particularly petrol and diesel, have remained largely unchanged for nearly four years. Analysts now expect a post-election correction of ₹4–₹10 per litre while domestic LPG prices could rise by ₹40–₹50 per cylinder. 

The impact is already visible in the commercial segment. Earlier this month, the price of a 19-kg commercial LPG cylinder surged by around ₹993, crossing ₹3,000 in cities like Delhi after cumulative hikes of over ₹1,300 in three months. 

Households plan spending cuts, shift to alternatives 

The survey highlights that households are actively planning ways to cope with rising costs. 

“The largest group of 48% households indicated that they will shift partially to alternatives like electric stoves, induction or PNG, while 40% said they would reduce the frequency of LPG usage. At the same time, 44% respondents said they will continue usage despite higher costs, indicating limited flexibility for many households,” it said. 

Travel likely to take a hit as fuel costs rise 

In terms of transport, behavioural changes appear even more pronounced. 

“78% of respondents indicated that they would reduce non-essential travel, while 35% said they would shift to public transport such as metro, bus or train. Additionally, some households are considering carpooling, switching to fuel-efficient vehicles, or even electric vehicles for future use,” the findings showed. 

Economists warn that the impact of fuel price hikes extends beyond direct expenses. 

“A 5–10% increase in fuel prices will not only have a direct impact on household budgets but also a significant indirect impact through higher prices of goods and services, thereby worsening the situation for the average Indian household,” the survey added. 

Higher fuel costs typically push up transportation expenses, which in turn raise prices of essential commodities such as food and groceries. Restaurants and small businesses are also expected to pass on rising input costs, with food prices likely to increase by 10–15%. 

Despite the expected public discomfort over price hikes soon after elections, the broader economic reality remains unchanged. Rising energy costs tend to have a cascading effect across sectors, squeezing household budgets and reducing disposable income.