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Vietnamese inflation slowed to seven-year low of 2% in August
Vietnamese inflation slowed to the lowest level in more than seven years, benefiting from comparison with the peak of a surge in prices in 2008.
Consumer prices rose 2 percent in August from a year earlier, the weakest pace since January 2002, the General Statistics Office said in a statement in Hanoi Wednesday. In August 2008, prices soared 28.3 percent, the most since at least 1992.
Inflation in Vietnam has slowed as policy makers curbed credit growth and amid lower prices of commodities such as oil and rice. The deceleration in recent months largely reflects comparison with a high base in 2008, Standard Chartered Plc said this week.
“Year-on-year consumer price inflation is likely to pick up toward year-end as the high base effect fades,” wrote Tai Hui and Thomas Harr of Standard Chartered in a note dated August 24. Still, “we expect it to remain modest, within a range of 5 to 6 percent,” Hui and Harr wrote.
Overall food prices rose 1.7 percent in August from a year earlier, with the component including rice prices falling 9.5 percent. Lower rice prices have contributed to Vietnam gaining export market share from Thailand, the US Agriculture Department said this month.
Prices in the category including transportation fell 8.8 percent in comparison with a year earlier.
Recent analyst reports have predicted inflation in Vietnam will soon accelerate, with forecasts for the end of the year ranging from Dragon Capital’s 6.7 percent figure to HSBC Holdings Plc’s 9 percent expectation.
‘Becoming concerned’
“The central bank is becoming concerned about inflation and is planning to limit credit growth to 25 percent in 2009,” wrote Prakriti Sofat, a Singapore-based economist at HSBC, in a note last month, citing a 17 percent increase in credit as of July from the end of 2008.
HSBC last month revised its forecast for the State Bank of Vietnam’s benchmark interest rate, now predicting the rate will be increased to 9 percent by the end of June 2010, up from a previous expectation of 8 percent. The rate has held at 7 percent since February.
Consumer prices rose 0.2 percent in August from July, according to Wednesday’s report.
THANHNIEN, BLOOMBERG
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