Over the past 6 months, petrol prices have soared, and they have soared mighty real quickly. Technically, in the month of June last year the Government of India decided to let the right of modifying and setting the price of petrol, unto the respective state owned oil firms. Ever since, prices of petrol have seen a steady rise and this has been directly impacting the nations inflation.
A hyperlink in this article will lead you to the real discussion which determines how we may justify this price hike, when we actually explore this issue from the point of view of the state owned oil firms and the Government itself. But for now, let us explore, even if the price hike is justified; how come, may we justify, the reason for the rapid and uncontrollable rampage of inflation all around the year!
As you see, that petrol is the staple fuel for most of the vehicles in India. But, all mass transportation is conducted on diesel, not petrol; primarily due to the high knock power it has, which helps it to impart more torque to the vehicle than petrol. So, hike in petrol prices must not really impact the prices of Diesel and subsequently should in no way, affect the transportation costs of goods across India. But, it is a common notion to hike the prices of all articles in wholesale market, simply whenever there is a hike in price of fuels across India, be it petrol, diesel or LPG.
Hence, there occurs a raise in the prices of articles and wholesale goods, thus indexing an increase in the inflation index of the nation. Though, technically, the hike of petrol neither affects the transportation costs, neither the cost of warehousing and nor the price of fuel consumed by the tractor which ploughs the fields. They all run on diesel, for Gods sake. But, the government fails to understand that whatever be the petrol price hike, however may it affect (or not affect) the price of wholesale goods, inflation will rise.
Thus, it becomes the moral responsibility of wholesalers to check this, but its rhetorical that they wont. Hence it falls instead upon the shoulder of the Governments to make this work for the general good of the country.