Petrol at Rs 70.65: why fuel keeps rising and who pays
Three 10% increases since March have pushed petrol and diesel up 21%. What is inside a litre, why the price moved, and what it costs households, workers and businesses.
In short
Since February 2026 petrol has risen from Rs 58.45 to Rs 70.65 and diesel from Rs 58.95 to Rs 71.25: both about +21% after three 10% increases (25 March, 16 April, 15 August). Diesel is at an all-time high.
The trigger is the war in the Middle East, which pushed world fuel prices up, combined with a weaker rupee (the August price structure uses Rs 47.80 per US$).
About 40% of a litre of petrol is taxes and levies: Rs 9.87 excise, Rs 9.22 VAT, and Rs 7.20 that funds the subsidies on gas cylinders, flour and rice.
Prices are not passed on in full: each revision is capped at 10% and the Price Stabilisation Account was Rs 3.2bn in deficit in April. The gap is recovered later, which is why diesel did not fall when world diesel prices eased.
The knock-on effects are already visible: transport prices +6%, electricity tariffs +15% from 1 May (128,800 of 541,127 CEB customers exempted), and year-on-year inflation at 4.9% in August.
What happened, step by step
Mauritius imports all of its fuel through the State Trading Corporation (STC). A Petroleum Pricing Committee reviews pump prices using a formula: the world price of each fuel, the exchange rate, freight, taxes and margins. When the war in the Middle East disrupted shipping and pushed world prices up in early 2026, the formula moved quickly.
Diesel went first, up 10% on 25 March. Both fuels rose 10% on 16 April, when the reference diesel price reached US$186.61 a barrel. Petrol rose another 10% on 15 August as world petrol prices kept climbing (US$1,032.80 a tonne) and the rupee weakened. In six months, filling a 40-litre tank of petrol went from Rs 2,338 to Rs 2,826.
What is inside a litre
Less than 55% of what you pay at the pump is the fuel itself (the “CIF” cost: the world price, insurance and freight, converted into rupees). The rest is taxes, levies and margins. One line surprises most people: Rs 7.20 on every litre of petrol and diesel goes to subsidise cooking gas cylinders, flour and rice: that is how a 12 kg LPG cylinder still costs Rs 250.
The Price Stabilisation Account works like a buffer: when world prices fall, the STC keeps pump prices up and saves the difference; when they rise, it draws on the account. In August it was knocking Rs 2.67 off each litre of petrol and Rs 1.97 off diesel, so without it, prices would be higher still.
Why prices rose: three forces
1. World prices. The conflict in the Middle East disrupted supply near the Strait of Hormuz. Diesel was hit hardest: it reached US$186.61 a barrel in April.
2. The rupee. Fuel is bought in dollars. The official average was Rs 46.00 per dollar in 2025 (Bank of Mauritius, via the World Bank); on 2 October 2026 OANDA quoted Rs 47.15. Every rupee of depreciation adds about 1.5-2% to the import cost of fuel.
3. The buffer ran dry. The Price Stabilisation Account had absorbed earlier rises and was Rs 3.2 billion in deficit by April. That is why the committee applied the maximum 10%, and why diesel stayed at Rs 71.25 in August even though the world diesel price had fallen from US$186.61 to US$142.85 a barrel: the difference is being used to repay the deficit.
Who pays, and how much
Fuel is one of the few costs that reaches every household, either directly at the pump or indirectly through bus fares, food prices and electricity. The examples below compare monthly fuel spending at February 2026 prices with today's prices. They are illustrative: your own use will differ.
The ripple effect on prices
Fuel affects inflation twice: directly, through the price of petrol and transport, and indirectly, through everything that is trucked, shipped, cooled or cooked. Headline inflation rose from 2.7% in March to 4.9% in August. Housing and utilities were up 8.9% on a year earlier, restaurants and hotels 8.6%, and transport 6%.
The Bank of Mauritius raised its Key Rate to 4.75% in May and held it there in August, forecasting inflation of around 5% for 2026. Higher interest rates cannot lower the world price of oil, but they aim to stop a temporary shock from turning into a lasting wage-price spiral.
What could be done, and what each option costs
There is no free option. Cutting excise duty would lower prices immediately but cost revenue at a time when the deficit is being reduced. Keeping prices high protects the budget but squeezes households and businesses. Most economists favour targeted help (for bus operators, fishers or low-income households) over cutting taxes for everyone, including large car owners.