Petrol price was on Wednesday hiked by 70 paisa per litre, the fifth increase in rates in two months, and diesel by 50 paisa per litre on firming international oil prices.
The increase in rates, which will be effective from Wednesday night, are excluding local sales tax or VAT. The actual hike will be higher and will vary from city to city.
Petrol price in Delhi will go up by 84 paisa to Rs 71.28 per litre while it will cost Rs 78.61 per litre in Mumbai as against Rs 77.73 currently.
This is the fifth increase in rates since June and in all petrol prices have gone up by a massive Rs 6.82 per litre.
Oil firms had on June 1 raised prices by 75 paisa, excluding VAT, and followed it with a Rs 2 per litre increase on June 16, a Rs 1.82 increase on June 29 and Rs 1.55 hike on July 15.
In a parallel move, they also hiked diesel rates by 50 paisa, excluding VAT, in line with the January decision of the government allowing them freedom to raise prices in small doses every month to wipe out mounting losses.
Diesel price in Delhi has been hiked by 56 paisa to Rs 51.40 per litre while it will cost Rs 58.23 in Mumbai from Thursday as compared to Rs 57.61 currently.
Wednesday's hike in the seventh since the January 17 and all losses on diesel sales should have been wiped off by now to make the fuel market priced.
But the fall in rupee, 12 per cent since April, has worsened the situation and oil firms are losing Rs 9.29 per litre despite prices being raised by a cumulative Rs 3.75 this year.
Announcing the price hikes, Indian Oil Corp (IOC), the nation's largest fuel retailer, said it will end the fiscal with a revenue loss of Rs 1,28,500 crore on sale of diesel, domestic cooking gas (LPG) and kerosene.
"Since the last price change, the international price of petrol has gone up from USD 117.19 per barrel to USD 120.05. The INR-USD exchange rate, however, has marginally appreciated from Rs 60.03 to a US dollar to Rs 59.49," IOC said in a statement.
The combined impact of these factors warranted a price increase of petrol by Rs 0.70 a litre (excluding state levies).
Further, pursuant to January 17 order of the government, diesel prices have been revised within a small range of 40-50 paisa per month.
"In continuation (of the decision), it has been decided to effect the increase in retail diesel prices. Even after the current increase, under-recovery (loss) on retail diesel shall stand at Rs 9.29 per litre," the statement said.
In addition to diesel, oil marketing companies continue to suffer under-recovery on sale of PDS kerosene of Rs 33.54 per litre and Rs 412 on sale of 14.2-kg LPG cylinder.
"For the year 2013-14, IOC is expected to incur under-recovery of Rs 68,000 crore on sale of the three sensitive products (diesel, LPG and kerosene) and the industry will lose Rs 1,28,500 crore," the statement added.
"The movement of prices in international oil markets and rupee-dollar exchange rate is being closely monitored and developing trends of the market will be reflected in future price changes," IOC added.