Burma's military junta announced yesterday it was raising the price of motor fuel nine-fold, an apparent attempt to ease pressure on state coffers strained by hefty subsidies on the tightly rationed commodity.
The move, announced in notices posted at official petrol stations, comes a few weeks after Burma's currency, the kyat, fell to a record low of 1,330 to the US dollar, from about 880 at the start of the year.
From today the price of a gallon of subsidised motor fuel will be 1,500 kyat, up from 180 kyat, the price at which it has been fixed for the past few years.
Analysts said the sharply higher prices would exacerbate domestic inflation already spurred by the sharp fall of the kyat in recent months.
News of the surge in the fuel price, which spread rapidly through Rangoon, sparked panic buying of many items in the capital as long-squeezed city residents anticipated a ripple effect from the move.
gLife will certainly be more difficult for a lot of people,h said Aung Naing Oo, a Burma Fund researcher who monitors developments. But Burmese have already been paying higher-than-official prices for much of the fuel they consume.
Under the regime's system of rationing, car owners can obtain only 60 gallons a month of subsidised fuel. If they require more they must obtain it through a thriving black market, where prices hover at about 3,600 kyat for a gallon of diesel.
Though Burma sits on abundant supplies of natural gas, development of this resource has proceeded slowly and the country still relies heavily on imported oil products.