Malaysia may review fuel prices twice a month: paper

KUALA LUMPUR (Reuters) - Malaysia's government may review petrol pricing twice a month and the proposals could be included in the 2009 budget debate, due on Friday, the Edge Financial Daily reported on Monday, citing unnamed sources.

Last week, the government announced price reductions for petrol of 5.6 percent after inflation surged in July to 8.5 percent, the highest since December 1981.

The government had previously said it would cut prices from September 1.

The price cuts took effect on Saturday, ahead of a key by-election on Tuesday in which opposition figure Anwar Ibrahim hopes to return to parliament after a 10-year absence and mount a challenge to the government.

"I understand that if the petrol review mechanism works, fuel prices may even be reviewed twice a month," once source told the Edge.

In June, the government abandoned a petrol price subsidy scheme which accounted for almost a third of total spending and the move caused a surge in inflation which has risen from 3.8 percent in May.

(Reporting by David Chance; Editing by Anshuman Daga)