Struggling with petrol prices? Here's how to manage it

With the price of petrol inching closer to ₹100 per litre, it’s natural to feel stressed about how this might impact your finances. And as each trip to a petrol pump starts feeling heavier than your wallet, the ripple effects of these expenses are hard to ignore.

While this surge in the cost of living may feel alarming at first, it does not have to compromise your financial health. With the right budgeting strategy, you can safely minimise the impact of a frequent rise in petrol prices.

Find out the reason behind the recent hikes in petrol prices and how you can keep yourself financially sound during this period of inflation.

Why are petrol prices soaring?
 

While no one factor can account for the increase in petrol price, here are some of the common reasons why this hike occurs –

1. Global oil prices – The global price of crude oil is one of the leading factors that decide the price of petrol, particularly in a country like India, which largely relies on imports. Supply-demand imbalances, geopolitical tensions, and fluctuations in the policies of oil-exporting countries can lead to the rising price of petrol.
   
   
2. Exchange rate fluctuations – India’s reliance on crude oil imports also means that any exchange rate fluctuations have a major impact on the price of petrol. A weaker Indian Rupee can cause an increase in petrol prices.
   
   
3. Higher taxation – When you pay at a petrol pump to refuel your car, you’re not just paying for the price of petrol—you also pay for the central excise duty and Value Added Tax (VAT) levied on it. India has one of the highest fuel taxes in the world, standing at 55% of the retail price of petrol, leading to a higher fuel cost.

The impact of a frequent rise in petrol prices on your finances
 

A frequent rise in the price of petrol can have several far-reaching consequences on your household budget and overall financial health. Here’s a breakdown of what this may look like –

1. Higher cost of commute – If you use a personal vehicle for your daily commute, the costs are bound to skyrocket due to an increase in the price of petrol. This causes public transport options and cab services to become more expensive as well.
   
   
2. Higher cost of living – Transport forms the backbone of the economy since it helps in moving goods from one place to another. With an increase in petrol price, all goods and services become more expensive due to the higher conveyance costs.
   
   
3. Increased financial stress – As the rising price of petrol causes a domino effect across all the different sectors, the average consumer ends up spending more and saving less. This impacts the monthly budget of households and can lead to financial stress.

5 Strategies to stay ahead of the petrol price surge
 

While there isn’t much that can be done regarding the increasing rate of petrol in India, you can adopt smart strategies to stay ahead of inflation. Some of the ways in which you can manage the rising price of petrol include –

1. Reworking your budget – As the cost of commodities goes up, it’s important to regularly update your budget so that it’s always up-to-date. This includes revisiting certain expenses that can be slashed back so that you can accommodate the rise in petrol prices.
   
   
2. Opting for fuel-saving habits – Driving more efficiently can help in reducing the consumption of fuel. Simple practices, such as maintaining optimal tyre pressure, turning off your vehicle’s engine at traffic signals, or even driving less aggressively, can make a huge difference.
   
   
3. Exploring affordable alternatives – If your budget cannot accommodate the rising petrol rate, another easy way to save money is exploring affordable alternatives. This can be as simple as walking smaller distances, using public transportation, and carpooling with others.
   
   
4. Leveraging financial tools – Using the right financial tools can make a huge difference in how much money you spend on fuel. For instance, using credit cards with fuel benefits, such as the FIRST Power Credit Card , can help you save easily.
   
   
5. Planning for the long term – The rate of petrol will only continue to rise as inflation increases. This is why future-proofing your finances by planning for the long term is so important. Consider investing in an electric vehicle (EV), relocating closer to your workplace, or even adopting a hybrid work model to cut down on your daily commute.

Conclusion
 

The increase in the price of petrol is an unavoidable reality. However, adopting the right strategies can help you manage this inflation and protect your financial health. As you navigate these challenges, remember that IDFC FIRST Bank is here to support you with innovative financial solutions tailored to your needs. With the right approach, you can weather this storm and stay on track towards your financial goals.