Vietnam inflation falls sharply in September

Business Materials 23 September 2008 11:35 (UTC +04:00)

Vietnam's inflation rate in September dropped to 0.18 per cent from August's 1.56 per cent because of falling food and fuel prices, Vietnamese government officials said Tuesday in a preliminary reading.

"This is the lowest inflation to date [this year]," said Nguyen The Hung, a senior official in the Planning and Investment Ministry, reported dpa.

Petrol prices fell on lower world oil prices, and rice prices fell because of a bumper autumn rice harvest in the Mekong Delta, but prices of several other kinds of goods rose faster than 1 per cent month-on-month.

Government authorities in other countries often exclude volatile food and fuel prices in setting monetary policy, relying instead on a "core inflation" rate. Vietnam has no such measurement.

"The eight-part package the government has been carrying out for the last six months with its priority of curbing inflation instead of boosting economic growth has been brought into full play," said Tran Duc Nguyen, an economist who served on a high-level government research group that was dissolved in 2006. "However, it is only a preliminary result, and is still very volatile."

Vietnam's inflation has been running at double-digit rates since the start of the year. Even with September's low rate, prices are up 28 per cent from a year earlier.

The Asian Development Bank forecast last week that Vietnam's inflation rate would be 25 per cent in 2008 and slow to 17.5 per cent next year, failing to meet the government goal of lowering inflation below 10 per cent.

The bank recommended Vietnam reduce its economic growth target to 6 per cent for 2009 and continue tight credit and spending policies to get inflation under control.

Analysts have worried that with inflation and trade deficit figures improving, the government would allow renewed growth in credit and spending by state-owned industries.