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Food, housing costs push up inflation for year to 11.75%
Inflation for the entire year raced past any prior targets to hit a double-digit figure of 11.75 per cent, driven mostly by food and housing costs, the General Statistics Office (GSO) announced on Dec. 25.
The consumer price index for 2010 rose at a rate nearly five percentage points faster than the initial target of 7 per cent set by the National Assembly at the beginning of the year – or the adjusted target of 8 per cent by the Government.
"The double-digit inflation was caused by deadly floods in the central region, steep increases in the prices of global materials, an unfavourable US dollar exchange rate, high interest rates and the appreciation of the Chinese yuan, which had a negative impact on domestic production," the GSO's Nguyen Duc Thang told Viet Nam News on Dec. 25.
The Government's policy which had focused on economic growth rather than controlling prices also contributed to the high inflation, Thang said.
In December alone, prices rose 1.98 per cent against November, with food witnessing the highest increase at 4.67 per cent, followed by housing and construction materials at 2.53 per cent. The prices of clothing and footwear also posted a 1.81 per cent increase.
Thang called a December inflation rate of nearly 2 per cent unusual. "The strongest rise often happens in January when the nation celebrates the lunar new year festival," he said.
Under new GSO measures and standards yet to be approved by the National Assembly, the overall inflation rate for the year would remain in single digits at 9.19 per cent, he added, with the target for next year to be set at around 7 per cent.
International Monetary Fund (IMF) resident representative Benedict Bingham said Viet Nam should target an inflation rate of 3-4 per cent, consistent with the rest of the Southeast Asian region.
"It's very difficult to maintain stability if the inflation target is so much higher than the rest of the region," Bingham told Viet Nam News earlier this month.
A recent report by the World Bank said inflation was historically high in Viet Nam due to the Government's traditional policy of emphasising growth over economic stability. Economic growth was expected to hit 6.7 per cent this year, just above the official 6.5 per cent target.
Global credit rating agencies Moody's and Standard&Poor's this month cited domestic sentiment on rising inflation when they downgraded Viet Nam's debt ratings and foreign currency ratings.
The foreign investor and donor communities, both at the Viet Nam Business Forum and at the Consultative Meeting earlier this month, raised growing concerns over the falling value of the dong and a perceived lack of an effective policy to control inflation.
vietnanet, VietnamnewS
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