INFLATION SPECIAL REPORT
February 2009
Inflation is down, below 18%; Rentals drop except for the unwary but all other cost rise. Hotel dinners @ $50 common.

Vietnam January inflation 17.48 pct, lowest in a year

Fri, Jan 23 2009, 03:50 GMT
http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=8e137398-2fef-44c5-a9b2-0ba0ee48a1fa

HANOI, Jan 23 (Reuters) - Vietnam reported its 15th consecutive month of double-digit annual inflation on Friday, but the rate of 17.48 percent for January was the lowest in the Southeast Asian country since last February.

The state statistics office estimated prices rose 0.32 percent in January compared with December due to a bump in demand ahead of the Lunar New Year holiday. It was the first monthly rise since September.

Annual inflation in December was 19.89 percent.

Food prices, which make up 42.85 percent of the CPI basket, rose 38.55 percent in January compared to a year ago, the General Statistics Office said in its monthly report.

With the headline figure coming down, economists say Vietnam appears to have tamed inflationary pressures.

In the first half of last year, with credit expanding at an unsustainable rate, consumer prices soared and the trade deficit widened, nearly precipitating a currency crisis. The trade gap has narrowed, too. On Thursday, the government estimated a trade deficit of $300 million in January, a fraction of the $2.41 billion deficit the country had in the same month last year.

Since the end of last year, with the global economy slowing, Hanoi has turned its focus to spurring economic growth.

However, the statistics office also reported that industrial output contracted by 4.4 percent in January compared with the same month last year. "Industrial production in January continued to be affected by both the global economic crisis and the shutdown of production around the Tet holidays," it said.

It estimated January's industrial output was 50.64 trillion dong ($2.98 billion), down 8.6 percent from about 55.43 trillion dong in December. Output has been slowing for several months.

Vietnam inflation at 17.48% in Jan, lowest in a year http://www.aseanaffairs.com/vietnam_inflation_at_1748_in_jan_lowest_in_a_year

January 23, 2009


Vietnam reported its 15th consecutive month of double-digit annual inflation on Friday, but the rate of 17.48 percent for January was the lowest in the Southeast Asian country since last February.

Reuters quoted the state statistics office estimated prices as showing a rise of 0.32 percent in January compared with December due to a bump in demand ahead of the Lunar New Year holiday. It was the first monthly rise since September.

Annual inflation in December was 19.89 percent.

Food prices, which make up 42.85 percent of the CPI basket, rose 38.55 percent in January compared to a year ago, the General Statistics Office said in its monthly report.

With the headline figure coming down, economists say Vietnam appears to have tamed inflationary pressures.

In the first half of last year, with credit expanding at an unsustainable rate, consumer prices soared and the trade deficit widened, nearly precipitating a currency crisis.

The trade gap has narrowed, too. On Thursday, the government estimated a trade deficit of $300 million in January, a fraction of the $2.41 billion deficit the country had in the same month last year.

Since the end of last year, with the global economy slowing, Hanoi has turned its focus to spurring economic growth.

However, the statistics office also reported that industrial output contracted by 4.4 percent in January compared with the same month last year.

"Industrial production in January continued to be affected by both the global economic crisis and the shutdown of production around the Tet holidays," it said.

It estimated January's industrial output was 50.64 trillion dong ($2.98 billion), down 8.6 percent from about 55.43 trillion dong in December. Output has been slowing for several months.

Vietnam's Inflation Rate 15 Percent; Highest in More Than a Decade

By BEN STOCKING / AP WRITER / HANOI 28 February 2009

http://www.irrawaddy.org/article.php?art_id=10595

Vietnam's inflation rate reached 15.7 percent in February, the highest in more than a decade, as the government struggled to control prices in Southeast Asia's fastest-growing economy.

The increase was driven by sharp price gains in food, housing and construction materials, the General Statistical Office said on its Web site Thursday.

Food prices were 25.2 percent higher than the same period last year, and housing and construction materials were up 16.4 percent.

"Everything is getting more expensive these days," said Nguyen Thu Huong, 31, who was buying groceries in Hanoi Thursday morning. "Life is getting much more difficult for people with low incomes."

Economists said Vietnam's inflation rate, the highest in the region, was fueled by both domestic and global forces.

Fuel and food costs are up around the world, but inflationary pressures are especially strong in Vietnam, which has been enjoying strong economic growth for several years now as the communist nation has embraced market reforms.

Foreign investment has been booming since Vietnam joined the World Trade Organization last year, when the economy grew at 8.5 percent.

Investors have also been pouring money into the red-hot real estate market and Vietnamese stocks, which enjoyed a remarkable boom last year but have recently been losing ground.

Meanwhile, strong growth in the banking sector has led to a rapid rise in lending.

Loans by Vietnam's joint stock banks were up 90 percent last year, said Jonathan Pincus, chief economist at the United Nations Development Program in Hanoi.

"Their lending grew at a really astonishing rate," Pincus said.

Vietnam's difficulties are compounded by the fact that its currency, the dong, is pegged to the very weak US dollar, Pincus said.

The country imports many construction materials from China, whose currency has been rising against the dollar, further fueling price increases here.

Meanwhile, the government has been phasing out subsidies for various commodities, including oil. It announced a 12 percent hike in gas prices this week and a 35 percent hike for diesel.

While Vietnam's inflation rate is cause for concern, the country remains an attractive investment destination, said Adam Sitkoff, director of the American Chamber of Commerce in Hanoi.

"Vietnam is still a cost-competitive place to manufacture products," Sitkoff said. "I don't think inflation will make Vietnam less appealing to investors, but it will hurt Vietnam's poor."

In an effort to curb rising prices, Vietnam's central bank has recently increased interest rates by half a percentage point. It has also ordered commercial banks to buy 20.3 trillion dong (US $1.3 billion) in treasury bills and asked commercial banks to raise their cash reserves.

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