Why LPG cylinder prices in India are close to that in Sri Lanka?

The price of LPG in India has been hiked for the second time in the last month. Cooking gas cylinders cost Rs 949.50 (14.2 kg) in the Indian capital after the recent hike of Rs 50. The prices have crossed Rs 1,000-mark in cities like Patna, Gwalior, and Morena. Interestingly, the price of cooking gas cylinders in Sri Lanka, which has an inflation of 17.5 per cent, are somewhere around Rs 1,100-1,200, depending on the exchange rates.

Why is it that despite 6.07 per cent inflation, much lesser than that of Sri Lanka, cooking gas cylinders in India are almost as expensive as they are in the neighbouring country? Here are the major reasons:

Russia-Ukraine war

One of the major reasons why LPG is getting expensive in India is because of the ongoing war between Russia and Ukraine. Russia accounts for over 24 per cent of the natural gas supply in the world. The ongoing war has made logistics hard to manage and hence has been one of the causes behind the steep hike in LPG prices in India.

Increase in price of raw materials

India's LPG is a mixture of 60 per cent butane and 40 per cent propane. The price of propane has increased over $0.34 per gallon, or 32.40 per cent, since the start of 2022, as per data from Trading Economics. Moreover, the price of butane has also seen a steady rise. The rising prices of raw materials are also factored in the highet price of cooking gas.

Post pandemic increase in demand

One of the other major reasons for the recent hike in cooking gas prices is also the increasing demand of LPG across the globe. The global rebound from the COVID-19 pandemic-induced slowdown has led to an increase in LPG demand. This has also contributed to the increase in cooking gas prices in India.

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