India`s fuel demand rose in October to a seven-month peak, with gasoline sales surging to an all-time high, government data showed on Tuesday, as festivals boosted mobility and economic activity in the world`s third biggest oil consumer.

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Fuel consumption, a proxy for oil demand, rose over 12% to 17.87 million tonnes last month from September. It was up 0.8% from the corresponding period last year and 3% from October 2019, data from the Petroleum Planning and Analysis Cell (PPAC) showed.

Consumption got a boost from the start of the festival season in October, offsetting the impact of high prices, Refinitiv analyst Ehsan Ul-Haq said.

October`s sales of gasoline, or petrol, were 8.3% and 3.4% higher than in 2019 and 2020 respectively and at 2.75 million tonnes, was the highest-ever monthly figure recorded as per data going back to 1998.

Improving vaccination coverage and the opening up of schools, colleges and offices helped demand, said Prashant Vasisht, vice president and co-head, corporate ratings at ICRA.

Diesel sales, which typically rise ahead of the Diwali festival, rose nearly 20% from September to 6.61 million tonnes, helped along by the quickest monthly expansion in the country`s factory activity in eight months.

Consumption of diesel, which accounts for about 40% of India`s refined fuel sales, was also up 1.5% from October 2020, but down 5.6% year-on-year.

India, Asia`s third-largest economy, reduced excise duty on petrol by 5 rupees ($0.0674) per litre, and that on diesel by 10 rupees ($0.1348) per litre, last week.

The lower prices and an uptick in economic activity should also aid diesel demand, ICRA`s Vasisht added.

Compared to last year, sales of cooking gas, or liquefied petroleum gas (LPG), increased nearly 3% to 2.49 million tonnes, while naphtha sales fell 5.2% to 1.28 million tonnes.