He also said the government would split civil servants' salaries into two payments a month, starting in August, to help them cope with rising inflation.

'The government realises that the people are still trying to get used to the situation of high oil prices,' he said.

He said the Cabinet had decided to keep petrol prices fixed at the current level this year, even though global oil prices had breached US$130 (S$178) a barrel and may spike further.

The pump price of petrol was raised last week by 41 per cent to RM2.70 (S$1.13) a litre. Diesel prices shot up 63 per cent to RM2.58 per litre.

The government says fuel subsidies are no longer tenable amid rising world oil prices. It has said its fuel subsidy bill could soar above RM56 billion this year, straining public finances.

The energy price hike is a politically risky move for Datuk Seri Abdullah, who is fighting for political survival after his ruling Barisan Nasional coalition's shock election losses in March.

There has been sporadic protests nationwide, and opposition groups have called for a mass demonstration next month to force the government to reverse its decision.

Despite the increase, Malaysia's fuel prices remain lower than other Asian countries such as Singapore, Thailand and India.

Malaysia also raised electricity tariffs from next month by as much as 26 per cent for some consumers. Mr Abdullah has said the revised energy prices would save the government RM13.7 billion, part of which will be used to help subsidise rising food prices.

ASSOCIATED PRESS, BLOOMBERG