Malaysia: Fuel Prices Up - Inflation Rate Might Rise Up to 5 Percent
Today Malaysia increased fuel prices by an average of more than 50%. The price hike was announced by Prime Minister Abdullah Ahmad Badawi yesterday.
While the price for gasoline will rise by 40.6% from MYR 1.92 to MYR 2.70, the price for diesel will rise by more than 63% from MYR 1.58 to MYR 2.58. Abdullah expects that inflation will rise up to 5% in 2008
Fuel prices in Malaysia had been unchanged since February 2006. The decision for the price hike will also spure inflation and may force the central bank to increase interest rates.
Subsidies have kept the price of fuel among the lowest in Southeast Asia. This year the Malaysian government will spend more than 45 billion ringgit for the subsidies.
Malaysia’s gasoline price hike was the steepest in percentage terms among Asian countries . On May 23rd, Indonesia raised fuel prices by an average of 28.7%.
