Following protracted negotiations, the government and fuel distribution companies agreed in April to raise fuel prices by AR50 (US$0.025) a litre. Fuel prices are a sensitive issue in Madagascar, as in other poor countries, and particularly so at a time when living standards are squeezed by public spending cuts. The rise in world hydrocarbon prices left the authorities with little choice but to acquiesce to the suppliers' pressure for permission to increase prices. The government demanded that the increase be small and apply to all oil derivatives. The distributors eventually agreed. The increase will affect not only the cost of public transport but also business costs and, in particular, the key transport links between rural food-producing areas and the capital, Antananarivo. The rise therefore threatens to push up the cost of food, further eroding the living standards of urban workers, who have already been hit hard by the problems in textiles and other urban-centred economic sectors.