The continued rise in gasoline consumption regardless of greater costs highlights a key financial idea generally known as price elasticity of demand.
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ANI
Retail costs of petrol and diesel in India rose sharply in current weeks as tensions in West Asia and the near-complete closure of the Strait of Hormuz disrupted world power markets.
After remaining unchanged for nearly 4 years, petrol and diesel costs had been revised upwards from May 15. In Delhi, petrol costs climbed from ₹94.77 per litre on May 14 to ₹102.12 by May 25, a cumulative improve of ₹7.35 per litre. Diesel costs rose from ₹87.67 per litre to ₹95.20 throughout the identical interval, up by ₹7.53 per litre. Regardless of these will increase, gasoline consumption knowledge means that demand has remained resilient.
Demand grows
Consumption of each petrol and diesel elevated in May in contrast with the identical month a yr earlier, whilst shoppers confronted greater gasoline prices. Petrol consumption rose to 39.1 lakh tonnes in May 2026 from 37.8 lakh tonnes in May 2025, representing year-on-year progress of three.38 per cent. Diesel consumption elevated to 87.2 lakh tonnes from 85.9 lakh tonnes over the identical interval, registering progress of 1.58 per cent.
The info additionally present momentum in gasoline demand on a month-on-month foundation. Petrol consumption elevated 6.13 per cent in May from April, reaching its highest degree of this yr to this point. Diesel consumption rose 4.75 per cent in the course of the month. Each fuels had witnessed decline in April earlier than rebounding strongly in May.
Based on Madhavi Arora, of Emkay Analysis, “oil demand is inelastic within the close to time period, it takes time to hit demand on sustained style. That is relevant each within the case of a price rise or price reduce.”
Understanding price elasticity of demand
The continued rise in gasoline consumption regardless of greater costs highlights a key financial idea generally known as price elasticity of demand. A product is taken into account price inelastic when adjustments in price have a comparatively small affect on the amount demanded.
The May knowledge illustrate this phenomenon clearly. Gas costs elevated by greater than ₹7 per litre inside lower than two weeks, but consumption of each fuels continued to broaden on each annual and month-to-month bases.
“Consumption tends to be sticky for these merchandise. Diesel is principally used for transport, the place it isn’t attainable to chop. Plus, excessive warmth has led to greater use of diesel generator units. In city areas the place petrol is used for personal transport, absence of alternate options has stored automobiles shifting. CNG costs too have gone up thus maintaining alternate options additionally costly,” defined Madan Sabnavis, chief economist, Financial institution of Baroda.
Printed on June 19, 2026
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