From Saturday, fuel prices will rise 5 sen (1.6 cents) to 1.90 ringgit (61 cents) a liter for gasoline and 1.80 ringgit (58 cents) for diesel. Liquefied petroleum gas will rise 5 sen (1.6 cents) to 1.90 ringgit (61 cents) per kilogram, while sugar will increase 20 sen (6.5 cents) to 2.10 ringgit (68 cents) a kilogram.

“Even with the second wave of subsidy reduction, our prices are still among the lowest in the region,” said Idris Jala, minister in the Prime Minister’s Department.

“We believe the people will be able to take this.” He said the price hike isn’t expected to cause a spike in inflation. The move is part of long-term strategy to gradually reduce subsidies, and the next round of cuts will depend on economic conditions, he added.

Malaysia’s fiscal deficit hit a 20-year high of 7 percent of gross domestic product last year. The government hopes to trim it to 5.3 percent this year and 2.8 percent by 2015 through fuel and other subsidy cuts over the next five years.

Subsidy cuts in July led to a savings of more than 750 million ringgit ($242 million). The government said at the time it would still spend an estimated 7.82 billion ringgit ($2.5 billion) on fuel and sugar subsidies this year.