The United Progressive Alliance government on Thursday announced slashing petrol and diesel prices by Rs 2 and Re 1 per litre, respectively, with effect from midnight on Thursday -- as part of measures to tame soaring inflation.

The reduction, the second in less than three months, was decided at a meeting that Prime Manmohan Singh had with Finance Minister P Chidambaram and Petroleum Minister Murli Deora.

Inflation, which has become a cause for concern for the government, galloped further to 6.73 per cent for the week ended February 3 from 6.58 per cent the previous week.

On account of the cut, state-owned oil companies' losses on sale of diesel would increase to Rs 2.30 per litre from the present Rs 1.30 a litre. Oil companies, which were hitherto earning a profit of Rs two per litre on petrol, would be breaking even following the reduction.

The finance ministry is also likely to make duty adjustments, possibly cut excise rates, and an announcement in this regard is expected soon.

The two key motor fuel prices were last reduced by an identical amount in November.

Following are the major changes in petrol and diesel prices (in Rs/litre at Delhi) effected since the UPA government took office in May 2004: