Political economist Charles Santiago said the private sector, transport industry and the man on the street would be affected most with this hike.

"The real wage of the people will further decrease, which will make the poor much more poorer," he told malaysiakini this evening.

He stressed that the budget is not "poor people" friendly.

A market analyst who wanted to remain anonymous said, a hike of 10 sen per litre on petrol and diesel would inevitably cause a 10 percent increase in transportation cost.

"The price of diesel is 70 sen per litre, an increase of 10 sen would mean an increase of 10 percent on the purchase price. The hike will make transportation costs higher...affecting all consumers," he said.

Meanwhile, The Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) is also disappointed with this hike.

"The increase in the price of diesel will affect a lot of industries, especially the transport industry," its president Lim Guan Teik told malaysiakini after the budget was announced by the Prime Minister Dr Mahathir Mohamad.

Cost offset by tax

He said, as a result the production cost of industries might be increased.

However, General Manager of Shell Malaysia Trading, Eddie Chan Yean Hoe said the increase on petrol prices will be offset by the decrease in personal income tax.

He explained that the monies saved from the income tax reduction would be more than enough to compensate the increase in the petrol prices.

But he could not anticipate as to how the public transport companies would react to the increase in petrol prices.

Opposition leader and PAS president Fadzil Mohd Noor expressed shock at the increase of petrol prices stating that it would unduly burden consumers.

"With the raise in petrol prices the government would actually be able to profit more than its 1.2 billion tax revenue loss. It would also burden the poor, school children and village folk.

PRM president Dr Syed Husin Ali said the party opposed this move entirely.

"Certainly it will cause an increase in the prices of goods which depends on transport, especially food products," he said.

While the poor will suffer from the hike in fuel prices, "luxurious items" such as yacht and imported motorbikes (affordable by the rich) saw a decrease in tax, he added.