A price increase is nothing less than a rationing device. You are likely to spend more if you consume the same quantity as before. Or, if you have a fixed budget (all budgets are limited in this sense), then you will consume less at a higher price. A higher price therefore means that there is a reallocation of resources - through the agency of money - from consumers to producers or the government.
In the current scenario of an increase in the fuel price, the objective is for the government to cut its subsidy by cutting the subsidy to those who are not intended to enjoy the subsidy. In other words, the government wants to give the subsidy to the poor (we can argue who is poor). By giving the subsidy across the board, the government also gives the subsidy to the unintended groups, as such the local rich (who can argue about who is rich) and all foreigners who drive their foreign cars here to fill up (what about foreigners driving local cars to fill up). The official argument goes on to say that the only way to give subsidy to a well-defined group is to give cash to this well-defined group.
But, of course, the price increases affects everybody even those who receive the cash subsidy (the latter have to make sure that they do not spend on fuel more than the subsidy; the counter-argument is that, at least, you have got "some" subsidy). In an evolved supply chain with lots of linkages, there will be multiple impacts from a simple increase to the end of the line - the so-called "butterfly effect" where the flutter of the butterfly in the tropics eventually causes a typhoon in the ocean. The official solution to this butterfly effect is to disallow this effect to multiply - a 10.5% increase in the price of petrol by 20 sen from RM1.90 per litre is now allowed to have an impact of 0.1% on food prices nationwide.
Simple arithmetic tells you that fuel enters only as 0.01% of a supplier in the supply chain and if the supply chain has 20 linkages and each product has say another 20 inputs with price increases (think of the transportation), the net impact is 4% - by this very crude method of calculation.
It would be foolhardy to imagine that the price increase will have little or no impact on the welfare of the general population. This is rationing, as the price increase will reduce consumption - and probably domestici production (bad) or imports (good?). If not, then the price increase will force people to dissave or to borrow and get into debt - and this will be a transfer of the government deficit to the household deficit or the corporate deficit.
In any case, do not argue that the price increase will have no impact on the domestic economy or the domestic consumers except an arrest in the deterioration of the government balance sheet because we are only reducing our subsidy to (unwarranted) foreign beneficiaries. There will be collateral damage, all right, over and above the direct impact.