Vietnam inflation accelerates, suggesting future cooling efforts

April 26, 2011 - 0:0

Vietnam’s inflation accelerated at its fastest pace in almost two and a half years in April, ramping up pressure on one of Asia’s most troubled economies and suggesting further efforts to rein in prices could be in the works.

Consumer prices jumped 17.51% in April from a year earlier and 3.32% from March, the General Statistics Office said Sunday, further casting doubts on the ability of authorities to cap inflation at 7% this year. Last year, inflation reached 11.75%.
It was the fastest pace since December 2008, and comes after Vietnam’s consumer price index in March rose about 13.9% on year and 2.17% on month.
“The government’s tightening measures appear to be right, but the implementation of the measures should have been more effective,” said Le Tham Duong, an economist with Ho Chi Minh City Banking University. “It should have lowered the gross domestic product target. You just can’t try to tame inflation while aiming for a high GDP.”
Like other Asian nations, Vietnam is grappling with the threat of inflation amid strong economic growth. But unlike its neighbors, Vietnam suffers from imbalances that threaten its economic stability and have put strong downward pressure on its currency, the dong.
Those imbalances recently forced Vietnamese authorities to succumb to pressure, both internally and externally, to overhaul its macroeconomic policies, which have long focused largely on delivering rapid growth. The government in Hanoi has unveiled plans to tighten monetary and fiscal policies, including a cut to public investment and the budget deficit, while ramping up domestic production and rebalancing trade. A credit growth target of 23% has also been lowered to less than 20%.
(Source: WSJ)