How do current fuel subsidies mitigate the rising cost of living?

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Current Fuel Subsidies Aim to Alleviate Cost of Living Pressures

The government's current fuel subsidy programme is designed to cushion the impact of rising living costs, particularly for low- and middle-income households, by maintaining capped prices for RON95 petrol and diesel despite market price increases. This approach ensures that essential transportation costs remain stable for a significant portion of the population.
Maintaining Capped Fuel Prices

Despite global market fluctuations, the government has set a ceiling price for RON95 petrol at RM2.05 per litre and diesel at RM2.15 per litre. This intervention shields consumers from the full extent of the increased cost of crude oil. For instance, the current market price for diesel is approximately RM2.80 per litre, with the government covering the difference of 65 sen through subsidies to keep the consumer price at RM2.15 per litre.
Transition to Targeted Subsidies

Plans are in motion to transition to a targeted subsidy system, with implementation expected to begin with diesel in March 2024, followed by RON95 petrol in April 2024. This shift aims to ensure subsidies are directed more effectively towards those most in need, while potentially reducing overall government expenditure.
Continued Support for Essential Sectors and Regions

Under the proposed targeted subsidy framework, certain groups and regions will continue to receive specific pricing. For example, diesel subsidies for commercial vehicles transporting goods will be maintained to prevent price hikes on essential commodities. Private vehicle owners in Sabah and Sarawak will also continue to benefit from the RM2.15 per litre price for diesel. Furthermore, specific rates are being preserved for fishermen at RM1.65 per litre and for public transport like school buses at RM1.88 per litre.

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How do current fuel subsidies mitigate the rising cost of living?

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