The Yemeni government announced on Tuesday that it would lower fuel prices, following deadly riots sparked by a decision to cut government subsidies on petrol and diesel.
Twenty two people were killed and 375 injured in the riots across the country on 20 and 21 July, which caused huge damage to public and private properties, local officials said.
Witnesses, however, said the death toll was at least 50, with hundreds of injuries.
Fuel prices at petrol stations in Yemen doubled to US $7 for 20 litres, following the initial rise announced on 19 July.
In a country where 42 percent of the population lives on under US $2 per day, according to World Bank figures, people cannot not afford those prices.
The Minister of Civil Service Hamoud Khaled al-Sufi said that the government acted promptly to carry out orders of President Ali Abdullah Saleh to reduce prices by 20 percent for petrol and 30 percent for diesel.
The government was subsidising the price of fuel by over 52 percent. Officials said they were forced to raise prices to tackle a ballooning budget deficit brought on by the rising price of crude oil on international markets.
Yemen has been implementing an economic reform package with the support of the World Bank since 1995, the rise in fuel prices was part of this.
Instead, others measures are being taken.
"We have decided to halt some development projects which are not a priority, reduce the diplomatic missions of Yemen abroad, as well as consider closing down some embassies. We will also cut short government expenses," al-Sufi told IRIN in the capital Sana.
Sana had said it would offset the increase by cutting custom tariffs, raising state salaries and halving a planned general sales tax to 5 percent, but local people were not satisfied with this and took to the streets in protest.
Price rises, triggered by cuts in subsidies, have set off riots in Yemen in the past such as in 1998, often leading the government to revise its decision.