M'sian petrol, diesel prices up by 9-10%

[KUALA LUMPUR] PUTRAJAYA raised petrol and diesel prices by between 9 and 10 per cent late on Wednesday, eliciting howls of outrage from both sides of the political divide amid fears of yet another inflationary spiral.

The move, made to ensure that the government would meet its stated budget deficit target of 3.5 per cent of gross domestic product (GDP) by 2014's end, also demonstrated that Prime Minister Najib Razak - wary of the international rating agencies - intended to stick to his pledge of fiscal reform.

The price hikes are likely to have a one-off inflation spike starting this month; it could pose a slight drag on the economy by curbing consumer spending and hit business activity, as the increase in costs cannot be fully passed on.