Malaysia will raise petrol prices by more than 40 per cent from Thursday as it seeks to rein in government spending on fuel subsidies at the cost of ending a low inflation policy.

Government officials said Malaysia was in danger of spending M$50bn ($15bn, €10bn, £7.9bn) on fuel subsidies this year if government-set prices for petrol and diesel were not raised to reflect the surge in global crude oil prices to about $130 a barrel.

Before today’s increase, Malaysia’s fuel subsidy ac­counted for nearly a third of total government spending and was equivalent to about 7 per cent of gross domestic product, one of the highest proportions in the world. ... Read full article