Saturday, 05/12/2009 10:17

Vietnam says inflation may accelerate to February

Vietnam’s inflation will likely accelerate until February, the country’s Finance Ministry said, citing stronger consumer and industrial demand.

The country’s year-on-year inflation rate reached 4.35 percent in November, the third straight increase and the highest figure since May. The figure is likely to rise to “double digits” by next year, the International Monetary Fund said on Thursday.

“The consumer price index’s sharp rise comes from three reasons: First, increased domestic demand; second, a price increase for materials and fuels for production; and third, high credit growth,” the Finance Ministry said in a note distributed at a conference in Hanoi.

Until February 2010, “Consumption demand and the demand for construction materials in the dry season will continue to scale up, putting pressure on the consumer price index,” the Finance Ministry said.

The consumer price index will also be driven up by the “Delayed impact” of monetary and fiscal policies, the Finance Ministry said. Vietnam’s central bank lowered its benchmark lending rate from 14 percent in October 2008 to 7 percent in February 2009 and held the rate there until announcing an increase last week to 8 percent.

Vietnam’s trade deficit is also a “Concern,” the Finance Ministry said, citing a trend toward stronger imports of consumer goods.

thanhnien, Bloomberg

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