NEW DELHI: A fuel price freeze by India’s oil companies as the global crude market surges could dampen inflationary pressures enough to delay an interest rate hike, and might generate significant electoral gains for Prime Minster Narendra Modi, observers said.

Indian fuel retailers revised prices daily through much of last year but, despite the oil market hitting a seven-year high, have held them unchanged since early November as well as cutting gasoline and gasoil taxes.

The government and fuel company officials say they want to protect consumers in the world’s third biggest oil importer “from volatile global oil and refined fuel prices”.

The measure - not subject to a written government order but nevertheless hurting the oil companies’ profits, senior officials speaking on condition of anonymity said - also coincides with the run-up to key elections.

Modi’s Bharatiya Janata Party (BJP) is facing voter anger over accelerating inflation and job losses suffered during the COVID-19 pandemic ahead of five state ballots next month.

How the BJP performs in those elections - notably in Uttar Pradesh, India’s most populous state - will provide a litmus test of Modi’s chances of retaining power in national elections in 2024.