New Delhi, May 26 -- India's fuel prices are once again emerging as one of the biggest inflation risks for the economy, and economists say the impact goes far beyond what consumers pay at petrol pumps. With repeated hikes in petrol and diesel prices in recent weeks, experts warn that the ripple effects are likely to spread across food, transportation, services and manufacturing in the months ahead.

According to economists, India remains especially vulnerable to oil shocks because of its heavy dependence on imported crude and the central role diesel plays in transportation and supply chains. As a result, fuel inflation rarely stays confined to fuel alone it gradually spreads through nearly every layer of the economy.

"Every $10-per-barre...