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The Malaysian government is still subsidising RM400 million despite the latest round of fuel price hikes, said the second finance minister Datuk Johari Abdul Ghani. “Based on the October price, actually the price increase is supposed to be 20 sen. But Prime Minister Datuk Seri Najib Tun Razak feels that we should reduce a little bit (the increase) because we can’t increase too much,” he said.

Fuel prices were up by 15 sen across the board from November 1, with RON 95 now at RM1.95 per litre, RON 97 at 2.30 per litre, diesel at RM1.90 per litre, and Euro 5 diesel at RM2.00 per litre. This follows an earlier round of price increase in October, after September’s price drop for petrol.

The current retail prices were calculated based on the average price for October, which saw a higher increase than what the government had set for retail purchase, according to Johari. Prices are influenced by a number of factors, including the foreign exchange which fluctuates according to the flow of the global economy – a stronger ringgit against the greenback would help in lowering the fuel price, he added.

“We use a “one month behind” mechanism, so the fuel prices for December will drop if global crude oil prices also drop this month,” he said, refuting accusations that the government makes a profit from the across-the-board fuel price hike.

Back in December 2014, the Domestic Trade, Cooperatives and Consumerism Ministry (KPDNKK) explained that under the managed float system, it would monitor the average fuel prices for the first 19 days of each month to see if it warranted a revision. If there was a marked change, the average price of the last 10/11 days of the month would dictate the pump prices for the following month.