November 17, 2008, 7.08 pm (Singapore time)

Malaysia cuts fuel price by 7%

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KUALA LUMPUR - Malaysia on Monday cut petrol prices by 7 per cent, bringing pump prices down to RM2 (56 US cents) per litre as global crude prices continued to ease.

Deputy premier Najib Razak said the 15 sen cut would be effective on Tuesday with diesel also reduced by 15 sen to RM1.90 per litre.

'This reduction... follows the promise the government has made to reduce (fuel) prices if there is a drop in oil prices in the global market,' he said in a statement.

'The government hopes that businesses will take steps to reduce the price of goods so that the public can get the full benefit of the price cuts,' he added.

'We also hope that consumers will use petrol and diesel sparingly even though prices have dropped.'

It is the fifth fuel price cut the government has announced since June's 41 per cent hike on the back of soaring crude costs, which sparked angry street protests and calls for premier Abdullah Ahmad Badawi to resign.

The last cut, by 15 sen, was just over two weeks ago.

Mr Abdullah had said prices would be reviewed periodically based on the cost of oil.

June's hike saw inflation soar, with the August price index reaching a 26-year high of 8.5 per cent, also driven by the escalating cost of food and transportation.

In September, inflation eased to 8.2 per cent as fuel prices dropped. -- AFP