The price of RON95 petrol and diesel will go up by RM0.20 per litre from midnight announced Prime Minister Datuk Seri Najib Razak today.

Najib, who is also the finance minister, added that the 1Malaysia People Aid (BR1M) will be raised from the current RM500 in Budget 2014 to better direct financial aid to the needy.

RON95 petrol will be priced RM2.10 per litre and diesel RM2.00 after the hike, up from RM1.90 and RM1.80 respectively.

“We hope sellers will not take this opportunity to increase the price of goods without taking care the interests of the people,” Najib told reporters after a Fiscal Policy Committee (FPC) meeting here, describing the effect of the hike as “minimal”.

The decision today was made as part of Putrajaya’s move to consolidate its fiscal position, and reduce the federal government current account deficit-to-gross domestic product (GDP) ratio to 3 per cent by 2015.

“Currently, our subsidy system benefits everyone, including the higher income group and foreigners. Thus, we need to move to a more targeted subsidy system that caters for the vulnerable groups,” Najib added.

The price hike will reduce Putrajaya’s fuel subsidy of RON95 petrol to 63 sen per litre and 80 sen per litre for diesel.

The last time RON95 petrol and diesel’s prices were hiked was in December 2010, from RM1.85 per litre to RM1.90 and from RM1.75 to RM1.80 respectively.

The price for RON97 petrol was last increased in May 2011, from RM2.70 per litre to RM2.90.

Malaysia’s fiscal deficit has already widened to RM14.9 billion, and runs a relatively high government debt of 53 per cent of GDP in addition to one of Asia’s highest household debt levels.