The compression is good and does not burn excessive oil .Fuel consumption has dropped from 8 kilometers per liter to 5.7 kilometers per liter.Same driving cycle same location. What should I look for?
Blocked jets in the carburettor.
Small particles of grit can block any one of the jets in these carburettors. The fuel still gets to the engine through the other jets but the efficiency is much degraded. The number and size of the jets varies by model.
I have seen this problem on various old Russian and pre-VW Skoda cars.
Fortunately, the carburettor is easy to work on and you have two approaches:
1) On older carburettors there will be a connector where you can connect a tyre pump and give a blast of air to clear the grit.
2) The jets easily unscrew, so you can blow through them individually. You will have to take the top off the float chamber to access some of them, this is just a matter of half a dozen screws. The float is connected to the top and will lift out as you remove the top.
While you have the float chamber exposed, it is worth checking if there is grit sitting at the bottom. If so, wipe it out with a cloth.