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Inflation slows on lower food, fuel prices
Vietnam’s consumer prices fell 0.2 percent this month from September, the first decline since March 2007, on the back of lower fuel and food prices.
The year-on-year inflation growth slowed for a second month to 26.7 percent in October, according to figures released Saturday by the General Statistics Office (GSO) in Hanoi. It was 27.9 percent last month.
The monthly fall comes amid lower world commodity and energy prices, domestic fuel price cuts and tightened credit by Vietnamese banks.
Since the start of the year, Vietnam's consumer price index has risen by 21.6 percent, said the GSO. Prime Minister Nguyen Tan Dung last week had forecast that the annual inflation rate for 2008 would be 24 percent.
Former State Bank of Vietnam Governor Cao Sy Kiem said the most difficult stage was over. Vietnam’s inflation rate in August reached 28.3 percent, the highest year-on-year increase since at least 1992, according to GSO.
Inflation has seen “a vast improvement from earlier in the year,” DWS Vietnam Fund Ltd. said in a note sent to investors on October 23.
On October 21, the State Bank of Vietnam cut its key interest rate to 13 percent from 14 percent, with HSBC Holdings Plc saying the bank was encouraged by evidence of slowing inflation.
US Federal Reserve Chairman Ben S. Bernanke and the heads of six other central banks said this month that global inflationary pressures are moderating amid a financial crisis.
Overall food and beverage prices, which account for nearly 43 percent of the goods basket Vietnam uses to calculate the consumer price index, fell 0.42 percent September, with prices in the sub-category including rice declining 1.9 percent.
Prices in the category including transportation fell 0.9 percent from September, according to the GSO report. The price of 92-RON gasoline, the country’s most commonly used grade, is now at VND15,500 ($0.92) per liter, down from VND17,000 at the beginning of the month.
Prices in the category including construction materials declined 1.1 percent, month-on-month.
Local companies are having difficulty securing financing after a rise in interest rates earlier in the year, and amid a government focus on keeping credit expansion in check, the UK-listed fund Vietnam Holding Ltd. said this month. “Inflation has responded to policy changes,” it said.
Head of the Economic Institute of Ho Chi Minh City Tran Du Lich said slower inflation is a “good sign” but warned that “risks of high inflation still exist.”
However, Kiem called for continuing the prioritizing inflation fight by retaining the tightened monetary policy.
Lich suggested the government takes measures to encourage bank loans to agricultural production and small-and medium-sized enterprises.
Thanhnien
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